Sculptures of a bull and a bear sit outside the Istanbul Stock Exchange in Istanbul in this file photo. Bloomberg photo
Turkey has recovered from the crisis without resorting to the “insurance policy” that the International Monetary Fund could provide, according to a top banker.
Speaking to the Anatolia news agency in the southeastern province of Gaziantep, Saruhan Doğan, Finansbank’s deputy director-general, said the IMF provides a “long-term insurance policy” for countries such as Turkey: “During these tough times, we made it without such a policy. A disaster scenario is baseless even if there is no IMF agreement.”
“The year 2009 started with concerns over the crisis, but the recovery came rapid and strongly,” he said. “The credit markets have not been fully opened yet and we are living through the effects of this on the private sector, but I expect a full recovery rapidly with the positive trend in financial indicators, the fall in exchange rates and rising confidence in the system. The year 2009 has become a transitionary year and we have to be happy to have overcome the biggest crisis of the century.”
The current abundance of liquidity in the world is the biggest assurance that the world will not go through another crisis, he said.
“Figures have deteriorated in the payments of credits, but there is an improvement here also,” Doğan said. “The key thing in Turkey is that no bankruptcies happened in the financial sector. The problems in the corporate sector were also much less than feared. We can say that Turkey has dodged this crisis.”
In the short term, a deal with the IMF or the prospect of a non-deal would have no effect on the markets, Doğan said. “We have managed to get through the toughest times without the insurance the IMF would provide. I see it as a slim possibility that the government would warm toward an agreement as the sun is shining again. A disaster scenario is out of the question if no agreement is sealed.”
Recalling the record profits of Turkish banks during the crisis, Doğan said these profits are a result of the falling interest rate in fixed interest rate instruments and such a trend is not sustainable.
“Over the following period, banks will be under pressure on growth and profitability,” he said. “And this is important for the real sector. A bank that aims to expand its balance sheet and to profit more would open its limits and soften its outlook. Thus, a period in which banks will turn their faces toward customers and open credits is coming.”
Turkish banks netted an overall profit of $8.4 billion in the first seven months of the year, representing an annual increase of 35 percent, according to data from the Banking Regulation and Supervision Agency.
Next year, interest rates will stay low while liquidity will be in abundance and Turkish Lira maturity terms will extend, Doğan said, adding that he does not expect the U.S. dollar to gain against the lira.