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Fitch Ratings on Monday announced that  it has downgraded the Long-Term Foreign-Currency Issuer Default Ratings (LTFC IDRs) of 20 Turkish  banks  and their subsidiaries, as reported by Reuters.

Key takeaways from the publication

  • The downgrades of the banks’ VRs reflect increased risks to their stand-alone credit profiles over the rating horizon since the last review of these institutions on 20 July 2018.
  • The banks’ performance, asset quality, capitalisation and liquidity and funding profiles are now more likely to come under pressure as a result of the further depreciation of the Turkish lira, the spike in interest rates, and the weaker growth outlook.
  • At the same time, Fitch believes that near-term pressure on the banks’ ratings has moderated as a result of the eventually orthodox monetary policy response, the stabilisation of the lira exchange rate, recent evidence of external market access – albeit at a higher cost – and the absence of significant deposit outflows since mid-August.
  • The ‘b+’ VRs of T.C. Ziraat Bankasi A.S. (Ziraat), Turkiye Halk Bankasi A.S. (Halk), Turkiye Vakiflar Bankasi T.A.O. (Vakifbank), TSKB, Akbank T.A.S., Turkiye Garanti Bankasi A.S. (Garanti), Yapi ve Kredi Bankasi A.S. (YKB), Turkiye Is Bankasi A.S. (Isbank), Turk Ekonomi Bankasi A.S. (TEB), ING Bank A.S., QNB Finansbank A.S. and Denizbank A.S. reflect their exposure to the high-risk Turkish operating environment.