Turkey’s Albayrak says central bank independent, sees no crisis in banking sector

Turkish Treasury and Finance Minister Berat Albayrak says dispute with US not benefiting ‘US state or people.’ (Yasin AKGUL/File/AFP)
Updated 03 September 2018
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Turkey’s Albayrak says central bank independent, sees no crisis in banking sector

  • Berat Albayrak said he did not expect any problems in the banking sector
  • The lira has fallen some 40 percent against the dollar so far this year

ISTANBUL: Turkey’s central bank is independent of government and will take all necessary steps to combat inflation, Finance Minister Berat Albayrak told Reuters, defending an institution that has not raised its benchmark rate in nearly three months despite a currency crisis.
Albayrak also said he did not expect any problems in the banking sector, in stark contrast to recent warnings from ratings agencies that the lira sell-off could weaken lenders’ assets. In the event of a problem at banks, Ankara would be willing to step in with support, he said.
The lira has fallen some 40 percent against the dollar so far this year, hit by concerns about President Tayyip Erdogan’s control over monetary policy and a worsening diplomatic rift with the United States.
Economists say the central bank needs to hike rates decisively to rein in double-digit inflation and support the currency. Erdogan, a self-described “enemy of interest rates,” wants low rates to keep a credit-fueled growth boom going.
“The central bank in Turkey has been maybe more independent than those in other countries,” Albayrak, Erdogan’s son-in-law, said in an interview at a 19th century mansion overlooking the Bosphorus in Istanbul. The bank will take steps “to continue this independence,” he said.
Turkey has reached a point where it requires a “full-fledged fight against inflation,” Albayrak said.
The central bank, which holds its next meeting on Sept. 13, said on Monday it will adjust its monetary stance given “significant risks” to price stability, a rare move to calm markets after inflation surged to its highest in nearly fifteen years.
At its last meeting in July, the central bank left rates on hold, confounding market expectations and sending the lira sharply weaker.
It plunged as low as 7.24 to the dollar in mid-August. On Monday it traded at 6.62 at 1109 GMT, around 1 pct weaker on the day.
Albayrak’s appointment two months ago as treasury and finance minister has cemented the perception that the economy and monetary policy are now fully under Erdogan’s control.
Christian pastor
Albayrak was visiting London on Monday for talks with Britain’s finance minister Philip Hammond, part of Turkey’s efforts to strengthen relations with Europe’s main economic powers as a dispute with Washington shows no sign of easing. He was in Paris last week and will go to Germany next week.
Relations with the United States, a NATO ally and major trading partner, have soured over a series of issues including Turkey’s detention of an American Christian pastor on terrorism charges and the US sentencing of an executive from Turkish state bank Halkbank for busting sanctions on Iran.
Adding to the friction, the US Treasury is investigating Halkbank for violating Iran sanctions. The bank has said all of its transactions were legal.
Turkey hired a US law firm to look into Halkbank’s dealings with Iran and found that it did not violate US sanctions, Albayrak said, adding Ankara does not expect the bank to face any fine.
“As a result of a months-long independent examination, it has been established that the bank had not violated primary and secondary US sanctions against Iran,” he said.
Referring to Turkey’s wider dispute with the United States, Albayrak said Washington had taken it to a point that did not benefit “the US state or people.”
Bad debt
For years, Turkish firms have borrowed in dollars and euros, drawn by lower interest rates. The currency slump has driven up the cost of servicing that debt and investors fear that banks could now be hit by a wave of bad loans.
Around $179 billion of Turkey’s external debt matures in the year to July 2019, according to JPMorgan estimates. Most of that — around $146 billion — is owed by the private sector.
Ratings agencies Moody’s and Fitch both sounded alarm about the outlook for banks last week, with Fitch estimating that banks’ foreign-currency lending now stood at around 43 percent of all loans.
“I have no reason to be worried at this stage. But we are aware how important the banking sector is. We are in a close coordination and cooperation with our banks and the (banking watchdog) BDDK,” Albayrak said.
“We are not expecting any problems in the banking sector, but in case of a problem, we will support them in every way.”
He also dismissed concerns about debt, including in the private sector. He said the current account deficit will be “considerably below” forecasts by year-end and “much stronger” in 2019. (Additional reporting by Tuvan Gumrukcu, Ece Toksabay and Humeyra Pamuk; Writing by David Dolan and Dominic Evans; Editing by Toby Chopra)


Renault board to meet on Thursday for Ghosn replacement

Updated 22 January 2019
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Renault board to meet on Thursday for Ghosn replacement

  • Carlos Ghosn has already been stripped of his positions as chairman of Nissan and Mitsubishi
  • The French government is Renault’s biggest shareholder, with a stake of more than 15 percent

PARIS: French carmaker Renault said Tuesday that it would hold a board meeting Thursday to name a replacement for its boss Carlos Ghosn, who remains in custody in Japan over alleged financial misconduct.
Sources close to the discussions said that the company would put forward Thierry Bollore to replace Ghosn as chief executive and Michelin chief Jean-Dominique Senard as board chairman. Ghosn currently holds both roles.
Ghosn has already been stripped of his positions as chairman of Nissan and Mitsubishi in the wake of the allegations.
The French government, Renault’s biggest shareholder with a stake of more than 15 percent, is particularly keen to see the company appoint a new leader.
Ghosn, who was arrested on November 19, is set to remain behind bars for the forseeable future after a Tokyo court denied him bail on Tuesday.
Prosecutors suspect he under-declared his income in official statements to Nissan shareholders between 2010 and 2015 to the tune of some five billion yen ($46 million), apparently in an attempt to avoid accusations he was overpaid.
A separate but similar charge is that he continued to do this between 2015 and 2018, under-reporting his income by a further four billion yen.
He also faces a complex charge of seeking to shift personal investment losses onto Nissan’s books and transferring company funds to a Saudi contact who allegedly stumped up collateral for him.