Will Turkish banks İşbank, Garanti, Akbank and Turkey default due to currency obligations ?
Turkey had significant foreign exchange outflows which we saw in the previous period (CLICK HERE) due to the huge costs required by Erdogan ‘s costly imperialist wars and the significant problems of the businessmen and businesses in our neighboring country, that are deteriorating.
In two days, there was an outflow of an additional $ 1.5 billion from Turkey, as we reported yesterday (CLICK HERE).
Turkey now has a frightening shortage of foreign exchange currency for its export and import companies.
The Net currency reserves, after paying Turkeys currency SWAP payments are already negative and are estimated at -1.5 billion US dollars,(CLICK HERE).
as the country has a CURRENCY SWAPS of $ 25 billion. It is no coincidence that the Lira is falling to new lows vs US Dollar.
At this stage Erdogan regime is trying to secure Dollars from countries like Russia and China through a new currency SWAP , whilst the country’s commercial banks, its last stronghold, have dried up from foreign exchange currency.
CDS ( Credit Default swaps ) are the so-called risk premiums, which show the ‘cost’ for someone to insure their money in the event that an obligation such as currency bond is not paid. In other words, the PRICE of CDS is the safest indicator of whether an organization, company or state will go bankrupt. Prices in CDS below 100 points show bankruptcy probability below 1%, while prices above 600 points show that the probability of bankruptcy exceeds 5%. At the moment, the CDS of both the Turkish state and its banks are at desperately HIGH prices,
indicating that Turkey’s probability of bankruptcy is extremely high (which here we see on the screenshot is slightly more than 33% over the forthcoming years).
The Turkish large banks we examine here have also a high probability of bankruptcy (due to foreign exchange bonds). This high probability of bankruptcy is very much similar to that Turkey has seen the last time the country asked for a painful loan from the International Monetary Fund.
The Garanti BBVA is the second largest private bank in Turkey, having 385 billion Turkish liras (then 84.3 USD billion ) assets in mid 2018.
On the following table we can see how the CDS for 5 year foreign bond of GARANTI Bank, has skyrocketed from 300-350 units that it was at the beginning of the year, to, currently, 839 points. This now indicates an annual probability of bankruptcy that exceeds 5% and is approaching 10%!
and here we can see it in a diagram
These prices were already high as we showed in a report yesterday for the three largest banks İşbank , Garanti , Akbank (CLICK HERE) but also for Turkey itself. But we see that they skyrocketed for all 3 big banks.
Here we can observe on the following graph the CDS values for Akbank TAŞ. Founded in 1948, Akbank TAŞ belongs to the Sabancı family (a wealthy Turkish family), and the Bank has assets of TL 387 billion.
The İşbank is the largest private bank in Turkey, having assets of TL 470 billion and was founded by Kemal Ataturk himself. Bank major shareholder in 2019 , holding 28.1% share, was the warlike center-left Republican People’s Party (CHP) of ‘Attila’ Ecevit , that invaded and occupied the Cyprus Republic. This bank now also has a problem. CDS prices on a two-year Senior dollar bond rose another 35 points since Monday, reaching … 851 points indicating the highest probability of bankruptcy for the bank ever recorded.
All of the above provide robust evidence that the Turkish government is in a very difficult situation, and it can no longer be saved by its banks, whose ability to repay their dollar obligations is now closer to the brink.
If the Turkish government and these Turkish Banks be unable to secure foreign exchange funds immediately, then there may be unpredictably undesirable consequences for them……