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It is a truth universally acknowledged that Turkey’s banks are overly dependent on external financing. Whenever the country hits economic or political turbulence, as it has with alarming regularity over the last few years, the spectre of a bank funding crisis is resurrected in rating agency updates and gloomy analyst reports.
Yet whenever Turkish banks actually appear in the international markets, they meet with an enthusiastic response – as in the case of Akbank’s $1.2 billion dual-currency syndicated loan outing in early February.
What explains this paradox? If Turkish lenders are vulnerable to an exodus by international banks and bond buyers, why do those same banks and bond buyers continue to support them in times of market stress? And is there a risk that they could withdraw their support in the event of further external or domestic shocks?
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Data from Euromoney Bank Risk provides some clues as to the answer. Despite market volatility after the failed coup attempt last July, not one of the six Turkish private-sector banks included in the survey – which is based on the feedback of independent analysts, both domestic and international – saw its overall risk score fall in the third quarter of last year.
