S&P Global Ratings on July 22 acted on five Turkishbanks following the July 20 downgrade of the sovereign.
S&P downgraded the long-term counterparty credit ratingsof Türkiye Is BankasiAS, Türkiye GarantiBankasi AS and unit Garanti Finansal Kiralama AS, andTürkiye Vakiflar BankasiTAO to BB from BB+.
The short-term counterparty credit ratings of Isbank,Garanti Finansal, Yapi ve Kredi and Vakifbank were affirmed at B.The agency also downgraded the long-term Turkey national scale ratings on Isbank,Vakifbank and Yapi ve Kredi to "trAA-" from "trAA+". Theshort-term Turkey national scale ratings on these entities were affirmed at"trA-1".
The outlook on all five rated entities is negative.
S&P said that in the wake of the failed coup in Turkey,the government and the country's banks face increased risks to their ability toroll over short-term debt. The possible erosion of investor confidence in thecountry could hit lenders' wholesale funding, which is heavily reliant onforeign sources, the agency added, noting that asset quality, earnings andcapitalization could also be hit by "any marked weakening in economicgrowth."
The agency noted the positive effects of decelerating creditgrowth and the authorities' recent proactive measures to banks' liquidity if needed.
S&P Global Ratingsand S&P Global Market Intelligence are owned by S&P Global Inc.