15 Nisan 2011 Cuma

Butterfly of the Japanese yen crushes Turkish lives

Şöhret Karagöz and her daughter show their 'dream home' in İzmir. Their house became a nightmare after the appreciation of the Japanese yen.

Şöhret Karagöz and her daughter show their 'dream home' in İzmir. Their house became a nightmare after the appreciation of the Japanese yen.
Şöhret Karagöz’s dream of a lifetime was no different than millions of other Turkish citizens: The 36-year-old resident of the western province of İzmir simply wanted to own a house. But she witnessed her dream turn into a nightmare when the global economy took an unexpected twist and the appreciation of the Japanese Yen pushed her to the brink of bankruptcy.

In a globalized economy that feeds on rapid movements of capital around the world, a butterfly flapping its wings in Asia can indeed have disastrous consequences on the Aegean shores. Partly due to the trillions of U.S. dollars being pumped into economies by the U.S. Federal Reserve, the greenback has been plummeting against the Japanese currency, which has gained nearly 37 percent against the dollar since the start of 2008. And this is no longer a concern for Japanese exporters only.

“Monthly installments started with 800 Turkish Liras and rapidly rose to 1,375 liras,” said Karagöz, who borrowed a housing loan tied to the yen from “a nearby bank” in July 2008.

Since then, the yen has appreciated 62.3 percent against the lira, as her installments grew to unbearable proportions.

As if the yen’s rise was not enough, the company she worked for as a marketer went bankrupt as the global crisis hit home. The massive debt also resulted in the break-up of her family, with a divorce case ongoing. “Happiness is something we forgot a long time ago,” she told the Hürriyet Daily News & Economic Review. No light at the end of the tunnel in sight, Karagöz and her 18-month-old daughter moved into her 77-year-old mother's house. The house bought on borrowed yen is currently for rent, paying for around one-third of the monthly installment.

In July 2008, when she took the loan, Karagöz owed 99,200 Turkish Liras to the bank. In 29 months, she has paid over 34,000 liras. She still owes 131,395 liras.

Bankers criticized

Karagöz is not alone. According to claims by “foreign currency victims” that are organizing online, there are over 200,000 people who took home loans tied mainly to the yen or the Swiss franc. The latter has appreciated nearly 60 percent against the lira since the start of 2008.

Data from the Banking Regulation and Supervision Agency, or BRSA, shows that the number of people who borrowed on foreign currencies is 107,268.

“As these currencies surged, the debts of many increased by around 70 percent,” said Aygün Gürcan, one of the online organizers. He further claimed that banks “encouraged” citizens to borrow especially on the yen. “The bankers told us that the yen had not risen in the past 15 years,” he said.

Metin Sezgin told the Daily News he received a loan of 7.2 million yen in 2008, as his bank assured him the yen was “safe and stable.” At that time, his loan corresponded to 75,000 liras. “I’ve been paying my installments regularly for two years. I still have 100,000 liras in remaining debt,” Sezgin said.

Hasan Ergen borrowed 7.6 million yen, equal to 83,000 liras nearly three years ago. He was forced to borrow yen as his loan application in domestic currency was not accepted. “I started to pay 1,000 liras per month three years ago,” Ergen said. Today he pays nearly 1,700 liras each month. “I paid 50,000 liras in the past three years. I still owe 110,000 liras,” he said desperately.

“Those who take loans should bear in mind that the currencies might decrease or increase,” said Haluk Bürümcekçi, chief economist at Fortis Bank in Istanbul. “The yen’s rise was not foreseen in 2008, of course. But the risk was taken and the situation turned out to be unfortunate.”

E-mail and phone interviews conducted by the Daily News indicate that the indebted are increasingly cornered and they may have to sell their dream homes for cheap prices.
“We did not even know what the yen was,” said Sezgin Ertürk. “It was my bank that directed me to borrow in yen. My debt keeps on rising. My family is on the edge of falling apart.”

Debt restructuring

The key demand of the online campaign group is that debt be restructured in local currency. However, the situation does not look bright on that front. Melike Çako, another “yen victim,” said banks are not willing to do that. In 2008, when she took the loan, Çako was paying 1,800 liras each month. The figure today has ratcheted up to 2,462 liras.

Ozan Bisen, a marketing employee at a private firm in Istanbul, borrowed 139,500 Swiss francs in 2007, which at the time corresponded to 140,000 liras. Since then, he has paid nearly 100,000 liras back and still owes 163,000 liras. He started with monthly installments of 1,700 liras, which surged to 2,750 liras today.
In a written statement to the Daily News on Monday, Erkin Aydın, the marketing coordinator of Finansbank, said the lender, criticized by some “yen victims,” owns only 4.6 percent of the housing loans fixed to foreign currencies.

“Finansbank tries to restructure such debt upon the requests of our customers, within the frame of banking rules and regulations,” Aydın said. Attempts to contact lending officials of Fortis, another criticized bank, bore no fruit.

A peculiar feature of the yen victims is that most are from the Aegean region, including Gürcan, Ergen and Ertürk. When asked whether he wished to help the tens of thousands of borrowers, Deputy Prime Minister Bülent Arınç said Tuesday he had no information on the issue. “No one came to me with these kinds of complaints before,” Arınç told the Daily News in Ankara.

Gürcan requested the government help them restructure their debt. “Most of the banks are deaf to our calls,” he said.

Göksel Bozkurt from Ankara contributed to this report.

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