Turkey’s banking watchdog, the Banking Regulation and Supervision Agency (BDDK), announced yesterday on Saturday new regulations to push private banks to give more credit and purchase government bonds to support the economy during the coronavirus pandemic. The new regulation will be effective as of May 1st.
According to a statement released by BDDK, banks are required to maintain a new consolidated and individual asset ratio of at least 100% starting at the beginning of next month; otherwise. If they do not comply, they will have to pay an administration fee. The ratio will be calculated by banks and will be reviewed weekly by the BDDK.
The sum of a bank’s loans, 75% of its securities portfolio and 50% of its central bank swap balances must exceed the sum of its Turkish lira deposits and 125% of foreign currency deposits, according to the new regulation. For participation banks, which follow Islamic banking regulations, the loans, securities and swaps should equal at least 80% of the deposits.