ANKARA
The Turkish banking watchdog, the Banking Regulation and Supervision Agency (BDDK) said on Wednesday that the Turkish banking sector is solid.
Speaking to Anadolu Agency's Finance Desk in Ankara on Wednesday, the president of Banking Regulation and Supervision Agency (BDDK) Mehmet Ali Akben said that Turkish banks are not vulnerable to the effects of the depreciation of the Turkish lira, which hit a historic low of about 2.91 against the dollar on Wednesday.
On the contrary, the Turkish banking market is expanding, Akben pointed out.
"Some small banks in Turkey want to grow by making domestic acquisitions," he said.
"Meanwhile, banks from some countries that have not yet entered our market are working on this and some seriously want to enter. When they meet the conditions, we are ready to open our market to them," Akben said.
"Turkey is one of the rare countries in the world which is not recapitalizing its banks. In many countries, governments are forced to recapitalize banks, but Turkey does not have this problem," he said, adding, "we do not expect that to happen.”
"Deposits in Turkish banks were at $63 billion during banking crisis in 2001. Currently, we're talking about 1.2 trillion Turkish lira ($415 billion) deposits in banks," he added.
According to Akben, Turkish elections and their aftermath are a cause of volatility.
"The election process affects finance in any country; volatility increases until the new government takes office. But this kind of activity has been reduced in Turkey in the past ten years."
Akben praised the strong banking sector: "We have a strong banking structure and a high level of capital adequacy. When we compare Turkish banking with developing countries, with Europe and America, Turkey's banking sector has a great potential. Turkish banking sector is not as big as the sector in developed countries. But our structure is strong, and as such, the sector continues to attract foreign investment."
According to Akben, the effect of the U.S. Federal Reserve’s interest rate increase will be limited. "Personally I do not think its impact will be severe, as the market has already priced it in."
Akben also said that his agency's decision to seize Islamic lender Bank Asya on May 29 was within the framework of the law.
"This was carried out within the framework of the law. The same practice can be applied to any bank in the sector. The requested documentation has still not been supplied."
Akben added that the current market share of participation banks [Islamic banking] in Turkey is 5 to 6 percent. "It is not sufficient for Turkey. Participation banks aim to reach 20 percent market share."
