Banking watchdog to urge sector to lower rates

Published 05.08.2016 21:12

The head of Turkey's banking watchdog and representatives from a number of banks will discuss President Recep Tayyip Erdoğan's calls to lower rates on Friday.

"We expect our companies to be supported with loans and lower rates for personal [and] housing credits. We will discuss these issues today," Banking Regulation and Supervision Agency (BDDK) Chairman Mehmet Ali Akben said ahead of a meeting with top officials from commercial banks.

Akben said the Bank of England on Thursday also cut its rates to a historic low to boost its economy and growth, adding that Turkey should follow a similar path.

"We expect to support growth. We believe the salvation of the country is dependent on growth," Akben said, stressing the importance of the implementation of low interest rates in the markets.

In a meeting held with top representatives from chambers of commerce and bourses at the Presidential Palace in Ankara on Thursday, Erdoğan urged lenders and commercial banks to reduce interest rates for home purchases to as low as 9 percent.

Top officials in the government, as well as Erdoğan, have repeatedly called on the Central Bank of the Republic of Turkey (CBRT) to lower its key rates for over two years in order to support investments, raise employment and the raise economy's real growth.

Erdoğan's calls to commercial banks to lower rates came after the CBRT started cutting rates last March to incentivize the lender institutions to reflect the cuts in the interest rates to markets. Akben said the measures introduced by the government and the relevant institutions in the wake of a coup attempt were successful, such as the measures by the CBRT aimed at providing liquidity to the markets and the successful effort to calming the markets.

"With no significant deterioration in loans, the banks are able to find finance and maintain their syndication credits without problems," Akben said. Praising the Turkish people's resilience against the foiled coup on July 15, which claimed more than 230 lives and injured at least 2,200 others, Akben said he expects banks to stand together with the people in getting over the economic impact of the failed putsch.

"Now we will discuss those issues face to face. We will converse on the role of the banking sector with regards to the normalization of the markets and the economy in course," Akben said.

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