Turkey's BDDK banking regulator has instructed banks to write off loans worth 46 billion lira by the end of 2019 and to reserve money for potential losses, Reuters reported.
The write-off of the loans, which were mostly to energy and construction sectors, is expected to result in an increase in banks' nonperforming loans ratio to 6.3% from 4.6%, the regulator said.
The move marks one of the most aggressive steps the country has taken to manage the consequences of a currency crisis it faced 2018, the newswire noted.
It came after Turkish Minister of Treasury and Finance Berat Albayrak said n a column on the Euronews website that a policy initiative to boost domestic savings will be announced. He said the measure will lead to long-term growth and reduce reliance on short-term capital flows, adding that several international and domestic investors were interested in forming funds to acquire distressed loans.
"We are keen to introduce necessary rules and regulations to extend our support to business environment," Albayrak said.
Turkey's TBB banking association said Sept. 10 it expects to restructure approximately $10 billion bank debt of the country's electricity production and distribution sector in 2019, according to a separate Reuters report. The sector's total debt stands at around $47 billion, the associated said.
As of Sept. 18, US$1 was equivalent to 5.67 Turkish lira.
