Fri, Mar 29, 2024
A A A
Welcome Guest
Free Trial RSS pod
Get FREE trial access to our award winning publications
Industry Updates

DBRS: Impact of Turkish Lira crisis on large European banks

Tuesday, August 21, 2018
Opalesque Industry Update - A number of European banks with exposure to Turkey face some impact as a result of the current Turkish Lira crisis. The banks most exposed to Turkey through their subsidiaries or equity investments are BBVA, UniCredit, BNPP, ING and HSBC.

The capital impact for these banks appears manageable based on DBRS's simplified stress scenario. However, DBRS expects negative impact on profitability and some deterioration in asset quality for some of these banks.

DBRS's main conclusions are as follows:

• There could be a negative impact on the Banks' profitability due to lower earnings in the local subsidiaries as well as their Turkish government bond portfolios and foreign exchange effects. In addition, it is possible that the five European parent banks might have to provide funding to their Turkish subsidiaries in case the latter are not able to repay their short-term foreign currency liabilities following a continued depreciation of the Lira. This is due to the high exposure of the five Turkish subsidiaries to foreign currency loans.

• DBRS expects the asset quality profile in the local subsidiaries to worsen in the near-term given the significant decline of the Turkish Lira and the deterioration in economic conditions.

• Nevertheless, DBRS considers the overall impact to be manageable given the Banks' diversified business models and strategies in place for their emerging markets exposures.

• DBRS will continue to monitor the situation in case the Lira crisis spreads to other emerging countries where European banks are present or if capital controls are put in place by the Turkish government to mitigate the currency's descent.

Article source - Opalesque is not responsible for the content of external internet sites

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Previous Opalesque Exclusives                                  
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. KKR raises $6.4bn for the largest pan-Asia infrastructure fund[more]

    Laxman Pai, Opalesque Asia: The New York-based global investment firm KKR has raised a record $6.4bn for its second Asia-focused infrastructure fund, underlining investors' continued appetite for private markets. According to a media release from the alternative assets manager, the figure top

  2. Bucking the trend, top hedge fund makes plans for a second SPAC[more]

    From Institutional Investor: SPACs aren't dead. At least not to the folks at Cormorant Asset Management. The life sciences firm, whose hedge fund topped its peers in 2023, is confident it will match the success of its first blank-check company. Last week, the life sciences and biopharma speciali

  3. Benefit Street Partners closes fifth fund on $4.7 billion[more]

    Bailey McCann, Opalesque New York: Benefit Street Partners has closed its fifth flagship direct lending vehicle, BSP Debt Fund V, with $4.7 billion of investable capital across the strategy. Benefit Street invests primarily in privately originated, floating rate, senior secured loans. The fun

  4. 4 hedge fund themes that are working in 2024[more]

    From The Street: A poor earnings report from Tesla (TSLA) has not hurt the indexes on Thursday. The decline in Tesla stock, which is losing its position in the Magnificent Seven pantheon, is more than offset by strong earnings from IBM (IBM) and ServiceNow (NOW) . In addition, the much higher-t

  5. Opalesque Exclusive: A global macro fund eyes opportunities in bonds[more]

    Bailey McCann, Opalesque New York for New Managers: Munich-based ThirdYear Capital rebounded in 2023, following a tough year for global macro. The firm's flagship ART Global Macro strategy finished the year up 1