Turkish banks have started to sell project finance loans to foreign lenders to free up cash as they face both higher funding costs as well as pressure to lend more cheaply, reported Reuters.
Turkey’s lenders are also facing a rise in bad loans, a reflecting the impact of a weakening lira on the economy and double-digit inflation.
The central bank raised interest rates by five per cent since April, driving up the cost of bank funding to 17.75 per cent.
Local banks have played a pivotal role in Turkey’s economic growth, helping finance some $89 billion in projects, including the big-ticket bridges, ports as well as railroads.
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Garanti Bank has around $12.6 billion in project finance loans, while Halkbank has around $7.7 billion in project finance and structured loans.
By Kudakwashe
