Moody's might downgrade Turkish banks

Moody's Investors Service said it placed on review for downgrade the ratings of Akbank TAS (Baa2 local- and foreign-currency senior debt), Asya Katilim Bankasi AS (Ba3 foreign-currency subordinated debt), Turk Ekonomi Bankasi AS (Baa3 long-term local- and foreign-currency deposits), Turkiye Garanti Bankasi AS (Baa2 local- and foreign-currency senior debt), Turkiye Halk Bankasi AS (Baa2 foreign-currency senior debt), Turkiye Is Bankasi AS (Baa2 foreign-currency senior debt and Ba1 foreign-currency subordinated debt), Turkiye Vakiflar Bankasi TAO (Baa2 foreign-currency senior debt and Ba2 foreign-currency subordinated debt) and Yapi ve Kredi Bankasi AS (Baa2 foreign-currency senior debt).

The agency said the reviews reflect concerns regarding pressures on the banks' standalone credit strength as the operating environment for the banking system will become more challenging over the next 12 to 18 months because of a material slowdown in real GDP growth, increased funding costs for Turkish banks because of the impact on emerging markets from U.S. Fed tapering and the economic recovery in developed markets and a climate of uncertainty affecting the banks because of Turkey's current political developments.

The reviews also reflect Moody's evolving views on the degree of systemic support that is incorporated in most Turkish banks' senior ratings. This is in light of the fact that the banking system and its financial obligations have grown significantly in relation to GDP in recent years, and will continue to do so in the coming years, increasing the potential cost of any government support in case of need, the agency said.

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