The Turkish banking regulator announced a new effort to push banks to step up lending, purchase government bonds and engage in swap transactions with the central bank after criticism from President Recep Tayyip Erdoğan, Bloomberg reported.
Under the plan, lenders will need to maintain a new “asset ratio” of at least 100 percent from May 1 that will be reviewed weekly, according to a statement published on Saturday. The banks that can’t maintain a ratio of at least 100 percent will have to pay administrative fee.
The ratio will be calculated by adding 100 percent of the value of the banks’ loans and 75 percent of government bonds, plus half the value of swap transactions with the central bank then dividing that amount by the sum of 100 percent of the value of Turkish lira deposits and 125 percent of foreign exchange deposits.
The regulator, known as the Banking Regulation and Supervision Agency (BDDK) , said the new rules aim to get banks to use their resources more effectively during the economic slowdown due to the coronavirus pandemic.
Erdoğan and Treasury and Finance Minister Berat Albayrak have repeatedly slammed private banks for failing to support companies even before the coronavirus outbreak paralyzed economic activity and curtailed people’s movement.