International credit ratings agency Fitch Ratings has revised the Outlooks on the Long-Term Foreign-Currency Issuer Default Ratings (LTFC IDRs) of ING Bank AS (ING), Denizbank, QNB Finansbank, Turk Ekonomi Bankasi (TEB), ICBC Turkey, Alternatifbank, Burgan Bank A.S. (Burgan Bank Turkey), Kuveyt Turk Katilim Bankasi (Kuveyt Turk) and Turkiye Finans Katilim Bankasi (Turkiye Finans) to Negative from Stable. The LTFC IDRs have been affirmed at 'B+'. The banks' Viability Ratings (VRs) are unaffected by this rating action.
Fitch states that the negative outlooks reflect its view that the weakening of Turkey's external finances is increasing the risk of government intervention in the banking sector, which could impede the ability of all banks in the sector to service their foreign currency obligations.
Fitch believes that intervention risks are increasing, given the greater risk of a stress in Turkey's external finances amid current heightened market volatility and Turkey's weakened net sovereign FX reserves position, and this is reflected in the Negative Outlooks on the banks' ratings. The agency adds that If pressure on Turkey's external finances continues to increase, then intervention in the banking system would become more likely, though it recognises that Turkey's high external funding requirement, a large share of which is sourced through the banking sector, creates a significant incentive to retain market access and avoid capital controls.