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Turkey is considering injecting capital into state-run banks

The initiative could involve the Treasury issuing special lira-denominated bonds and would focus on funding Ziraat Bank, Halkbank and Vakıfbank, Turkey’s three largest state-run lenders, Bloomberg said. The capital buffers of those companies have been eroded by heavy lending, the people said.

Turkey is considering injecting capital into state-run banks

Turkey is considering injecting capital into state-run banks as it seeks to provide more help for businesses and consumers to cope with the coronavirus outbreak.

It was not clear how much the banks will receive should the plan go ahead, Bloomberg reported on Monday citing people with knowledge of the matter.

The initiative could involve the Treasury issuing special lira-denominated bonds and would focus on funding Ziraat Bank, Halkbank and Vakıfbank, Turkey’s three largest state-run lenders, Bloomberg said. The capital buffers of those companies have been eroded by heavy lending, the people said.

Turkey’s government is complaining that non-government banks are failing to do their fair share of lending as it seeks to help combat the financial impact of COVID-19. More than a quarter of a million companies have applied for financial aid under a government programme designed to ensure they do not lay off workers as output tumbles, Dünya newsapaper reported on Monday citing a minister.

Bloomberg said there was no clear timing for the implementation of the capital injection, or if it would go ahead at all. The Treasury and Finance Ministry and Halkbank declined to comment. Officials of the other two banks did not return phone calls or e-mails, it said.

The government injected 28 billion liras ($4.1 billion) into state-run banks last year, the biggest amount in 18 years, Bloomberg said.

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