Moody's Downgrades 18 Banks in Turkey

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Credit rating agency Moody's has announced that it downgraded 18 banks in Turkey.

Ratings of some of the banks were downgraded from B2 to B3, and some from B3 to caa1.

Moody's also downgraded Turkey's bond rating on Friday (June 14) from Ba3 to B1 (highly speculative) and maintained negative outlook.

The downgrades primarily reflect a significant increase in external vulnerability for the country, exposing Turkish banks to a higher risk of a sudden shift in investor sentiment and depositor behaviour; a higher risk of more extreme government policy measures, which could include restricted access to foreign currency for depositors, reflecting policy uncertainty and weakening central bank's net foreign currency reserves; and a more prolonged deterioration of the operating environment, leading to a further weakening of banks' solvency metrics, the agency said. (HA/VK)