Turkish banks to face difficult times to renew securitization loans

Experts said the good news is that the credit crunch has not turned into a liquidity crisis for now, but it is inevitable there would be an increase in the costs of the loans, Referans business daily reported.Â

Turkish banks had so far used securitization credits worth $5.784 billion and expected to renew a total $9.792 billion in 2008.

Turkish banks are not obliged to renew all of their securitizations, the research director of Garanti Bank, Ali Ihsan Gelberi said.

"Consequently the banks use the securitization funding in giving loans in the domestic market. If there is an internal squeeze, then they could renew 80-90 percent of the securitizations. An increase in the loan costs would be reflected to the consumers," he was quoted as saying by Referans.

RISKS ON BANKING
Gelberi added even if the crisis comes to an end, international banks would be less willing to take risks and this would reduce liquidity in the global financial system.

"So the Turkish banks would not be able grow as they did in the past and the banking would not be as profitable as it was. This is the only risk for the Turkish banking sector," he said.

High-level executives have been warning on the deterioration of the global credit conditions, as well as on the potential rise in credit costs.

Is Bank's CEO, Ersin Ozince, has said it is almost impossible to find financial sources from abroad. The international credit agency, Standard & Poor's, also said this week that the credibility of the Turkish banking sector is higher than the average.