Tuesday, May 3, 2011
ISTANBUL - Hürriyet Daily News
 The rate for reserves might increase in the next few months, Süleyman Kalkan told the Hürriyet Daily News & Economic Review on the sidelines of a meeting with journalists in Istanbul. |
Turkey’s Central Bank may decide for a further increase of the required reserve rates for lenders in a bid to fight the skyrocketing current account deficit and cool down the economy, according to the top executive of the state-owned Vakıfbank.
The rate for reserves might increase in the next few months, Süleyman Kalkan told the Hürriyet Daily News & Economic Review on the sidelines of a meeting with journalists in Istanbul.
Turkey’s trade deficit surged 91 percent to $9.8 billion in March, compared with $5.1 billion a year earlier, according to Bloomberg. The nation’s current account deficit more than doubled in February from a year earlier. The deficit rose to $6.1 billion from $2.7 billion in the same month of 2010, according to figures by the Central Bank.
The Turkish Central Bank increased bank reserve requirements three times in the past year to 16 percent from 10 percent in 2010, in a struggle against the rapid credit growth and current account deficit.
“Regulators should be more concentrated on some credit types playing a role in the increase of the current account deficit, not all of them,” Kalkan told the Daily News.
Noting that Vakıfbank bank granted a considerable amount of credits in energy and tourism investments, “New investments in these sectors might slow down the rise of the current account deficit,” said Kalkan.
The bank keeps supporting movements of the Central Bank in order to cool down the economy and control the rise of current account deficit through reserve rate requirements, Kalkan said. “Vakıfbank has nearly 5 billion Turkish Liras reserved in the Central Bank with no interest in return.”
Turkish Central Bank’s Monetary Policy Committee hiked reserve requirements for short-term foreign currency deposits last month. Starting from May 13, banks will be required to park 12 percent of such deposits at the Central Bank, without earning interest. Previously, the rate was 11 percent.
Can Akın Çağlar, head of Ziraat Bank, the biggest state lender, also commented on the cool-down policy of the bank last week. Ziraat may lose 4 billion liras in profits as its net earnings may fall by 20 percent at the end of the year if the current reserve ratio continues to remain at the same level, Çağlar said during a meeting in Istanbul.
A recent decision to move its headquarters to Istanbul is a part of Vakıfbank’s, the state-owned lender, broader vision to expand and increase its “global visibility,” said Kalkan.
“It was a must for us,” he said.
The bank’s move is also a part of the government’s bid to turn Istanbul into a regional finance center, restructuring a banking district on the Asian side of the city.
“We have encouraged nearly 350 employees to move to Istanbul with the headquarter operations to Istanbul,” said Kalkan adding that the employees would be supported financially to adapt to the new environment.
“Nearly 1,500 liras extra per month will be paid to each employee during their first two years in Istanbul.”
“In order to compete with the other banks, we felt the necessity to be in Istanbul,” said Kalkan. “Istanbul has its own dynamism in finance world whereas Ankara has already lost its importance in that sense to Istanbul.”
The bank has opened 100 new braches all across the company, 80 new branches set to be opened in Istanbul by the end of this year, said Kalkan.
The rate for reserves might increase in the next few months, Süleyman Kalkan told the Hürriyet Daily News & Economic Review on the sidelines of a meeting with journalists in Istanbul.
Turkey’s trade deficit surged 91 percent to $9.8 billion in March, compared with $5.1 billion a year earlier, according to Bloomberg. The nation’s current account deficit more than doubled in February from a year earlier. The deficit rose to $6.1 billion from $2.7 billion in the same month of 2010, according to figures by the Central Bank.
The Turkish Central Bank increased bank reserve requirements three times in the past year to 16 percent from 10 percent in 2010, in a struggle against the rapid credit growth and current account deficit.
“Regulators should be more concentrated on some credit types playing a role in the increase of the current account deficit, not all of them,” Kalkan told the Daily News.
Noting that Vakıfbank bank granted a considerable amount of credits in energy and tourism investments, “New investments in these sectors might slow down the rise of the current account deficit,” said Kalkan.
The bank keeps supporting movements of the Central Bank in order to cool down the economy and control the rise of current account deficit through reserve rate requirements, Kalkan said. “Vakıfbank has nearly 5 billion Turkish Liras reserved in the Central Bank with no interest in return.”
Turkish Central Bank’s Monetary Policy Committee hiked reserve requirements for short-term foreign currency deposits last month. Starting from May 13, banks will be required to park 12 percent of such deposits at the Central Bank, without earning interest. Previously, the rate was 11 percent.
Can Akın Çağlar, head of Ziraat Bank, the biggest state lender, also commented on the cool-down policy of the bank last week. Ziraat may lose 4 billion liras in profits as its net earnings may fall by 20 percent at the end of the year if the current reserve ratio continues to remain at the same level, Çağlar said during a meeting in Istanbul.
Headquarters
“It was a must for us,” he said.
The bank’s move is also a part of the government’s bid to turn Istanbul into a regional finance center, restructuring a banking district on the Asian side of the city.
“We have encouraged nearly 350 employees to move to Istanbul with the headquarter operations to Istanbul,” said Kalkan adding that the employees would be supported financially to adapt to the new environment.
“Nearly 1,500 liras extra per month will be paid to each employee during their first two years in Istanbul.”
“In order to compete with the other banks, we felt the necessity to be in Istanbul,” said Kalkan. “Istanbul has its own dynamism in finance world whereas Ankara has already lost its importance in that sense to Istanbul.”
The bank has opened 100 new braches all across the company, 80 new branches set to be opened in Istanbul by the end of this year, said Kalkan.
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