The recent plunge of the Turkish lira, combined with the worsening relations with the United States, has caused fear among global markets as well as in the Turkish business environment. The Turkish lira has lost more than 45% of its value this year and hit a record low of 7.24 against the US dollar on 13 August in Asia Pacific trading. In an effort to avert the crisis, the Banking Regulation and Supervision Authority (the "BRSA") has taken various measures over the last few days, further to the Central Bank’s increase of liquidity in the Turkish banking sector. This Client Alert aims to briefly summarize the recent changes brought by the BRSA in August 2018 to mitigate the effects of the rising f/x rates and protect the Turkish banks and the private sector to the extent possible.
Measures relating to the refinancing of loans
On 15 August 2018, the BRSA introduced a new Regulation on Restructuring of Debts to the Financial Sector (the "Restructuring Regulation") in order to regulate refinancing mechanisms of loans granted by financial institutions in Turkey. This regulation concerns banks, financial leasing companies, factoring companies and financing companies in Turkey (hereinafter referred to as the "Creditor Institutions") as well as those indebted to such financial entities. It sets forth the framework for the restructuring of indebtedness between such parties. In this respect, new provisions introduced by the Restructuring Regulation may be summarized as follows:
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