Bloomberg News

Turkish Banks May Be Hurt by Guarantee Proposals, Oyak Says

June 15, 2011

(Updates with fund comments in paragraphs four and six.)

June 15 (Bloomberg) -- Turkish banking industry profit will be hurt by a proposed increase in deposit guarantees to their customers, Oyak Securities said.

An increase in the savings deposit insurance guarantee to the European Union average of 100,000 euros ($144,000) from 50,000 liras ($31,000) would affect 2.5 percent of depositors in Turkey and double the burden on banks to $1 billion, Oyak said.

“Deposit rates for private banking clients should be affected in principle, but we do not think banks can push the costs to the segment, which has high bargaining power,” Oyak said in a e-mailed note to clients today. ‘The increase will affect banking system profits.’’

The Savings Deposit Insurance Fund is reviewing the level of the guarantee and hasn’t made any decision, Sakir Ercan Gul, head of the fund, said in a statement carried by state news agency Anatolia today. Any decision will be taken in consultation with the central bank, the banking regulator and the Treasury, he said.

The fund is considering increasing the guarantee to as much as 100,000 euros to align the amount with EU regulations, Haberturk reported today, citing the fund.

The fund is also considering changes to the premiums banks pay for the deposit insurance, Gul said, according to Anatolia. The fund collects about 200 million liras ($125 million) from the industry in premiums every three months, he said.

The index of Turkish banks has dropped almost 18 percent since December 1, 2010. Turkiye Garanti Bankasi AS, Turkey’s largest listed bank by market value, has fallen almost 19 percent. Yapi & Kredi Bankasi AS, owned by UniCredit SpA and Koc Holding AS, dropped 28 percent over the same period.

--Editors: James Kraus, Linda Shen

To contact the reporter on this story: Benjamin Harvey in Ankara at

To contact the editor responsible for this story: Gavin Serkin at

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