Banks retain credibility

Turkish banks are considered safe and reputable players in world markets despite the current financial turmoil, according to the Loan Market Association of London.

The Loan Market Association, or LMA, founded in 1996 by seven leading banks in London, organized a training event regarding the current conditions of the European loan markets and their activities.

The association, which has over 400 members including banks, law firms, institutional investors and information providers, aims to encourage liquidity and efficiency in loan markets by promoting market depth and transparency, developing standard forms of documentation and codes of market practice.

The LMA aims to improve liquidity, efficiency and transparency in the primary and secondary syndicated loan markets in Europe, the Middle East and Africa.

Speaking to the Hürriyet Daily News & Economic Review, LMA's Executive Director Clare Dawson said the LMA has become the authoritative voice of syndicated loan markets in Europe and the Middle East. It sees Turkey "as a substantial financial market and are keen to promote the benefits and positive influence of the LMA in the loan industry, particularly in this difficult environment," Dawson said. "Education is also a core focus for the LMA and as the industry's official trade body, we are the ideal training provider for what is an increasingly technical market," she said.

Integration with the world
Turkey's integration with international markets has led market players to consider it a safe member of the banking industry.

"Turkish banks have a well established reputation for raising financing from international banking markets over many years, and they hold deep relationships with many international banks," said David Pepper, head of Central Eastern Europe, Middle East and Africa at WestLB, a participant of the LMA, who spoke at LMA's event in Istanbul last week.

"Due to the strength of these relationships, up until the summer of this year, Turkish banks were still able to obtain financing at attractive rates, at a time when other markets were deteriorating rapidly," Pepper told the Daily News.

Speaking on the global turmoil, Pepper said Turkey might be affected by the uncertainty in the international markets. "Turkish banks generally tap international markets twice a year, summer and autumn, and following their success in the summer round of refinancing, they may now find a very different environment in which they have to negotiate the autumn round. Negotiations have become protracted."

Despite the overall pessimistic picture, Pepper said he remained confident of Turkey's banking system. "Turkey has faced crises in the past, but has always maintained its credibility and never defaulted on its international obligations. It works with International Monetary Fund programs, which also provides a degree of comfort for international lenders," Pepper said.

But conditions are still changeable. Due to the anxiety the global crisis has created, there may be some changes in lenders' plans, Pepper said. "Lenders who have either recently entered the market or who are taking a far more relative value approach, may consider other markets, or picking up the same risk in secondary, at a far more attractive yield to provide better risk return."