Turkey will invest $ 2.8 billion in capital of several state-owned banks

US, WASHINGTON (ORDO NEWS) — Turkey plans in the coming days to invest about 20 billion lire ($ 2.8 billion) in the capital of three state-owned banks – Ziraat Bank, Halkbank and Vakifbank, reports Reuters.

Turkish banks are under increasing pressure as they are forced to issue more loans amid an outbreak of coronavirus, which plunges the country’s economy into what is expected to be the second recession in less than two years. State lenders usually have lower bank reserves than their private partners.

The Treasury did not immediately respond to a request for comment.

“We expect that the necessary regulation will be announced and published next week to increase the capital of state banks,” one of the agency’s sources said.

“The increase in capital will be from 5 billion to 7.5 billion lire for each state bank for a total of about 20 billion lire,” the sources said.

By 2:00 p.m. GMT, Halkbank and Vakifbank shares rose by about 2.5% and 1.5%, while Istanbul’s main stock index .XU100 and banking index .XBANK fell 0.6%.

Finance Minister Berat Albayrak said earlier that Turkey will soon announce the details of the plan to attract fixed capital from state-owned banks.

Albayrak said Turkey “is fully committed to supporting our state-owned banks.”

Turkey, which introduced a partial block to curb the pandemic, offered Treasury-financed loans to companies affected by the economic impact of the coronavirus crisis, while state-owned banks distributed deferred consumer loans.

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