No need to exaggerate downturn, ?zince says

Yes, the world markets are struggling due to the liquidity crunch and that certainly has its affects on Turkey's economy. However, the situation is not that terrible, so there is no need to exaggerate, said board chairman of the Banks Association of Turkey, or TBB.

"No one should exploit the situation in such a fragile period," said Ersin ?zince at a conference, titled "New Trends in Retail Banking," organized by TBB, SAP Software and European Financial Management & Marketing Association, or EFMA.

"No good can come out of making a move assuming that Turkey will be at a disadvantage. It is crucial for Turkey to make the right move at the right time, not a moment early or late," he said.

"Turkey's banking sector continues to fund the real economy. The figures confirm that there is no problem in allocating loans for the real sector. Disjunctive acts, such as recalling loans, should not be allowed," said ?zince, who is also managing director of İşbank.

Loan recall problems
The banks would damage the economy if they recall real sector loans, said ?zince. "We are quite sensitive on the loan recalling issue. As İşbank, people know how we handled and performed during the 1994 and 2001 crises in Turkey. However, it is of utmost importance that everyone pays their loan debt when it is due," he added.

"The majority of the banking sector is being affected by the global liquidity crunch. We have notified the government about that. But again, the banks will continue to provide loans. The economy is just not so active, rapid or vibrant right now. There is a global slow down and also it is the end of the year," said ?zince.

It is unknown when this financial crisis will come to an end. The dimension of its impact is also hard to foresee, said ?zince. The market is experiencing a big contraction in sources that are worthy of credit. Financial conditions are rapidly changing as well as the risk perceptions.
Reflecting on the actions of investors who turn to their own countries and low risk assets, "During a southwester you don't swim to the shore, you swim out to the sea. You head for the deeper markets, so you won't strike the bottom," said ?zince. "That is the reason why we see a major net capital outflow from developing counties."

The private sector and banks' chances of receiving finance from the international markets are narrowing, said ?zince. It is getting tougher to roll over all the matured debts and that causes the creditors to suffer, he added. "In the end, the creditors demand the country, no matter how bad of a situation it is in, to immediately pay back the credit it has received.

"There is a great effort to prevent this crisis from deepening and expending. That is a positive development," said ?zince." The preventions will be mostly related to restructuring, collocation and supervision of the financial sector."