The Central Bank is expanding the scope of its securities maintenance regulation to include banks as well as other financial institutions. These moves are generally aimed at permanently increasing the weight of the Turkish lira in both assets and liabilities of the banking system. According to this;
-The central bank said that the obligation of banks to hold securities according to the loan interest rate and loan growth rate has been extended until 29 December 2023.
-The central bank announced that gold holding facilities for Turkish lira required reserves were terminated as of June 23.
Banking sector commercial loan rates and the weight of bonds/bills in total securities… Source: CBRT, BRSA, Tera Yatırım
With the decision taken by the Central Bank on the last day of the year, another step has been taken. Thus, assuming that the banking sector's off-balance sheet liabilities are on the balance sheet, the establishment of securities is required. One of the major changes was the introduction of a securities requirement for factoring receivables. The situation in question will be challenging for factoring firms, because they can charge a higher interest rate compared to the banking sector since they do not have any securities obligations. This can have two reflections;
-As of today, factoring companies probably won't want to cash checks as much as they used to, because they will have to buy bonds with fixed yields of around 9%.
-They will need to lower the interest rates from around 40% to 25%. As high inflation continues and deposit rates are close to 25%, a check/credit discount below this is unlikely.
As the policy rate is around 9% and the deposit interest rate is around 25%, the gap between them causes a wide interest rate corridor to be formed in the market. In this environment, the Central Bank is trying to reduce the interest rates in the market with other policy tools. It intends to achieve this in steps under the liraization strategy. The most important of these regulations, of course, is the obligation to buy government bonds/Treasury bills, which currently have a yield of around 9%, which corresponds to non-selective loans to the banking sector. In order to avoid this obligation to buy bonds, the scope of which has now been expanded, the banking sector tended to close the TL deficit with more swaps or not to extend non-selective loans with securities obligations. In an environment where market rates differ, with further steps that are likely to be implemented until the election, more brakes may be put on loans due to the risk mode.
Kaynak: Tera Yatırım-Enver Erkan
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