Customers queue at ATMs in Kizilay district, in Turkish capital Ankara. Regulators are forcing commercial lenders to prioritise exporters and smaller businesses that account for nearly three-quarters of the job market. Bloomberg
Customers queue at ATMs in Kizilay district, in Turkish capital Ankara. Regulators are forcing commercial lenders to prioritise exporters and smaller businesses that account for nearly three-quarters of the job market. Bloomberg
Customers queue at ATMs in Kizilay district, in Turkish capital Ankara. Regulators are forcing commercial lenders to prioritise exporters and smaller businesses that account for nearly three-quarters of the job market. Bloomberg
Customers queue at ATMs in Kizilay district, in Turkish capital Ankara. Regulators are forcing commercial lenders to prioritise exporters and smaller businesses that account for nearly three-quarters

Business

Banking

Turkish banks are offering world’s cheapest loans — but only to a select few

The average cost of commercial loans fell from 30 per cent in July to about 16 per cent last week, following four rounds of rate cuts

Bloomberg

November 26, 2022

  • English
  • Arabic

Turkish banks are offering the world’s cheapest loans, but they are only available for a select few.

That’s because policymakers want to avoid a currency crisis while maintaining strong economic growth ahead of elections next year, where President Recep Tayyip Erdogan seeks another term.

Regulators are forcing commercial lenders to prioritise exporters and smaller businesses that account for nearly three-quarters of the job market.

New lira loans for smaller firms — a key group targeted for credit growth — rose nearly 10-fold on an annual basis during the first 10 months of this year, compared to a seven-fold increase for large corporates, according to the central bank.

Businesses that don’t fit the government’s image of worthy borrowers, including those rich in foreign currency, are struggling to secure cheap credit, even as rates were slashed to 9 per cent on Thursday despite inflation at 85 per cent.

Curtailing lending in this way could dent growth projected to reach 5 per cent this year.

“Only exporters with little import needs can get loans, which is only a handful of people,” said Eren Gonul, a sales manager at an Ankara-based furniture maker.

Mr Gonul said his business — like many others — did not aim to grow because they would need to take out loans at elevated costs in order to import more raw material, an expensive move with the lira at record lows.

“Lending rules aim to promote exports without fuelling inflation. Caps on lending rates already pose an obstacle to lending appetite, and clashes with other policies will further limit these policies’ success. The upcoming Treasury-backed credit guarantee fund is sure to spur demand, and feed into inflation,” said Selva Bahar Baziki, Turkey economist at Bloomberg.

Banks can either offer cheap loans to high-priority clients or lend at higher costs to others. The latter, though, requires them to buy a large amount of government debt to be parked at the central bank. That leaves little incentive to lend to second-tier clients.

The impact became more pronounced after Turkey started lowering interest rates in August in line with Mr Erdogan’s demands. The key objective is to avoid a sharp drop in the lira that followed past periods of rapid growth in loans.

A market in Istanbul, Turkey, which is suffering its worst cost of living crisis in decades. All photos by Bloomberg
A market in Istanbul, Turkey, which is suffering its worst cost of living crisis in decades. All photos by Bloomberg
There are few shoppers in sight as a trader hangs carpets outside his store in the Grand Bazaar in Istanbul
There are few shoppers in sight as a trader hangs carpets outside his store in the Grand Bazaar in Istanbul
Shoppers look for a bargain at the city's Wednesday Market
Shoppers look for a bargain at the city's Wednesday Market
Fresh fish for sale in Istanbul. Food prices have risen by 99 per cent in a year
Fresh fish for sale in Istanbul. Food prices have risen by 99 per cent in a year
Inflation in Turkey is running at 86 per cent
Inflation in Turkey is running at 86 per cent
A shopkeeper waits for customers in an alleyway of the Grand Bazaar in Istanbul
A shopkeeper waits for customers in an alleyway of the Grand Bazaar in Istanbul
A currency exchange bureau in Istanbul. Tourists are shielded from the rising prices
A currency exchange bureau in Istanbul. Tourists are shielded from the rising prices
Tourists queue to enter the Hagia Sophia mosque in Istanbul
Tourists queue to enter the Hagia Sophia mosque in Istanbul
A vendor waits for customers at a souvenir store
A vendor waits for customers at a souvenir store
A price banner for a tour of the Bosphorus Strait on the side of a passenger ferry in Istanbul
A price banner for a tour of the Bosphorus Strait on the side of a passenger ferry in Istanbul
A customer at a cheese and fresh produce store in Istanbul
A customer at a cheese and fresh produce store in Istanbul
Workers package ground coffee at a coffee shop. Half of Turks survive on the minimum wage
Workers package ground coffee at a coffee shop. Half of Turks survive on the minimum wage
Pedestrians walk past a fresh fruit juice stand in Istanbul
Pedestrians walk past a fresh fruit juice stand in Istanbul
Shoppers and tourists in Istanbul
Shoppers and tourists in Istanbul

The financial engineering under way is enabling credit growth without derailing the lira. But banks are wary of risks from taking on large amounts of government debt with long maturity.

“Erdogan learnt from the experiences of 2018 and 2020”, when explosion in loans boosted imports, inflation and eventually resulted in a weaker currency, said Nick Stadtmiller, emerging markets director at Medley Global Advisors in New York.

The fine-tuning is a key part of Mr Erdogan’s game plan to keep markets stable ahead of next year’s presidential vote.

Growing discontent over price pressures makes it paramount to anchor the lira. But Turkey is running low on net foreign reserves, and a rate hike to defend the currency in the case of another rout is hardly a choice, since that could cause a recession right before the elections.

Policymakers are thus pushing for “selective lending”, a practice that allows only some of the Turkish businesses to benefit from falling interest rates.

The so-called small-to-medium sized enterprises borrowed a record $35 billion this year, accounting for nearly half of all commercial loans, according to the central bank.

The average cost of commercial loans fell from 30 per cent in July to about 16 per cent last week, following four rounds of rate cuts.

But selective lending stopped that from translating into another boom and, instead, credit growth dropped from this year’s peak in June.

Regulations that saddled lenders with a large amount of low-yield government debt are causing an outcry among bankers.

The central bank told banking executives that they shouldn’t expect a reversal in policies until after the elections, according to sources.

The specs: 2018 Audi Q5/SQ5

Price, base: Dh183,900 / Dh249,000
Engine: 2.0L, turbocharged in-line four-cylinder /  3.0L, turbocharged V6
Gearbox: Seven-speed automatic / Eight-speed automatic
Power: 252hp @ 5,000rpm / 354hp @ 5,400rpm
Torque: 370Nm @ 1,600rpm / 500Nm @ 1,370rpm
Fuel economy: combined 7.2L / 100km / 8.3L / 100km

Our legal columnist

Name: Yousef Al Bahar

Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994

Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers

UAE currency: the story behind the money in your pockets
Hydrogen: Market potential

Hydrogen has an estimated $11 trillion market potential, according to Bank of America Securities and is expected to generate $2.5tn in direct revenues and $11tn of indirect infrastructure by 2050 as its production increases six-fold.

"We believe we are reaching the point of harnessing the element that comprises 90 per cent of the universe, effectively and economically,” the bank said in a recent report.

Falling costs of renewable energy and electrolysers used in green hydrogen production is one of the main catalysts for the increasingly bullish sentiment over the element.

The cost of electrolysers used in green hydrogen production has halved over the last five years and will fall to 60 to 90 per cent by the end of the decade, acceding to Haim Israel, equity strategist at Merrill Lynch. A global focus on decarbonisation and sustainability is also a big driver in its development.

Comment on Coronavirus
On Women's Day
Read more about the coronavirus
Tips to stay safe during hot weather
  • Stay hydrated: Drink plenty of fluids, especially water. Avoid alcohol and caffeine, which can increase dehydration.
  • Seek cool environments: Use air conditioning, fans, or visit community spaces with climate control.
  • Limit outdoor activities: Avoid strenuous activity during peak heat. If outside, seek shade and wear a wide-brimmed hat.
  • Dress appropriately: Wear lightweight, loose and light-coloured clothing to facilitate heat loss.
  • Check on vulnerable people: Regularly check in on elderly neighbours, young children and those with health conditions.
  • Home adaptations: Use blinds or curtains to block sunlight, avoid using ovens or stoves, and ventilate living spaces during cooler hours.
  • Recognise heat illness: Learn the signs of heat exhaustion and heat stroke (dizziness, confusion, rapid pulse, nausea), and seek medical attention if symptoms occur.
While you're here
UAE currency: the story behind the money in your pockets
While you're here
On Women's Day
more from Joseph Borell
The specs

Engine: 3.8-litre, twin-turbo V8

Transmission: eight-speed automatic

Power: 582bhp

Torque: 730Nm

Price: Dh649,000

On sale: now  

Final results:

Open men
Australia 94 (4) beat New Zealand 48 (0)

Plate men
England 85 (3) beat India 81 (1)

Open women
Australia 121 (4) beat South Africa 52 (0)

Under 22 men
Australia 68 (2) beat New Zealand 66 (2)

Under 22 women
Australia 92 (3) beat New Zealand 54 (1)

While you're here

 


 

Jetour T1 specs

Engine: 2-litre turbocharged

Power: 254hp

Torque: 390Nm

Price: From Dh126,000

Available: Now

LIVING IN...

This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.

Killing of Qassem Suleimani
The specs

Engine: 2.0-litre 4cyl turbo

Power: 261hp at 5,500rpm

Torque: 405Nm at 1,750-3,500rpm

Transmission: 9-speed auto

Fuel consumption: 6.9L/100km

On sale: Now

Price: From Dh117,059

Red flags
  • Promises of high, fixed or 'guaranteed' returns.
  • Unregulated structured products or complex investments often used to bypass traditional safeguards.
  • Lack of clear information, vague language, no access to audited financials.
  • Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
  • Hard-selling tactics - creating urgency, offering 'exclusive' deals.

Courtesy: Carol Glynn, founder of Conscious Finance Coaching

Specs%20
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Company profile: buybackbazaar.com

Name: buybackbazaar.com

Started: January 2018

Founder(s): Pishu Ganglani and Ricky Husaini

Based: Dubai

Sector: FinTech, micro finance

Initial investment: $1 million

The%20specs%20
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E2.0-litre%204cyl%20turbo%0D%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E261hp%20at%205%2C500rpm%0D%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E400Nm%20at%201%2C750-4%2C000rpm%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3E7-speed%20dual-clutch%20auto%0D%3Cbr%3E%3Cstrong%3EFuel%20consumption%3A%20%3C%2Fstrong%3E10.5L%2F100km%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3ENow%0D%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EFrom%20Dh129%2C999%20(VX%20Luxury)%3B%20from%20Dh149%2C999%20(VX%20Black%20Gold)%3C%2Fp%3E%0A
Formula%204%20Italian%20Championship%202023%20calendar
%3Cp%3EApril%2021-23%3A%20Imola%3Cbr%3EMay%205-7%3A%20Misano%3Cbr%3EMay%2026-28%3A%20SPA-Francorchamps%3Cbr%3EJune%2023-25%3A%20Monza%3Cbr%3EJuly%2021-23%3A%20Paul%20Ricard%3Cbr%3ESept%2029-Oct%201%3A%20Mugello%3Cbr%3EOct%2013-15%3A%20Vallelunga%3C%2Fp%3E%0A
The specs: 2018 Mitsubishi Eclipse Cross

Price, base / as tested: Dh101,140 / Dh113,800


Engine: Turbocharged 1.5-litre four-cylinder


Power: 148hp @ 5,500rpm


Torque: 250Nm @ 2,000rpm


Transmission: Eight-speed CVT


Fuel consumption, combined: 7.0L / 100km

The specs: 2018 Nissan Patrol Nismo

Price: base / as tested: Dh382,000

Engine: 5.6-litre V8

Gearbox: Seven-speed automatic

Power: 428hp @ 5,800rpm

Torque: 560Nm @ 3,600rpm

Fuel economy, combined: 12.7L / 100km

While you're here
On Women's Day
The specs

Engine: 6.2-litre supercharged V8

Power: 712hp at 6,100rpm

Torque: 881Nm at 4,800rpm

Transmission: 8-speed auto

Fuel consumption: 19.6 l/100km

Price: Dh380,000

On sale: now 

While you're here
Cricket World Cup League 2 Fixtures

Saturday March 5, UAE v Oman, ICC Academy (all matches start at 9.30am)

Sunday March 6, Oman v Namibia, ICC Academy

Tuesday March 8, UAE v Namibia, ICC Academy

Wednesday March 9, UAE v Oman, ICC Academy

Friday March 11, Oman v Namibia, Sharjah Cricket Stadium

Saturday March 12, UAE v Namibia, Sharjah Cricket Stadium

UAE squad

Ahmed Raza (captain), Chirag Suri, Muhammad Waseem, CP Rizwan, Vriitya Aravind, Asif Khan, Basil Hameed, Rohan Mustafa, Kashif Daud, Zahoor Khan, Junaid Siddique, Karthik Meiyappan, Akif Raja, Rahul Bhatia

While you're here
What the law says

Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.

“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.

“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”

If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.

UAE currency: the story behind the money in your pockets

500 People from Gaza enter France

115 Special programme for artists

25   Evacuation of injured and sick

Kareem Shaheen on Canada
While you're here
In numbers: China in Dubai

The number of Chinese people living in Dubai: An estimated 200,000

Number of Chinese people in International City: Almost 50,000

Daily visitors to Dragon Mart in 2018/19: 120,000

Daily visitors to Dragon Mart in 2010: 20,000

Percentage increase in visitors in eight years: 500 per cent

Tuesday's fixtures
Group A
Kyrgyzstan v Qatar, 5.45pm
Iran v Uzbekistan, 8pm
N Korea v UAE, 10.15pm
Nepotism is the name of the game

Salman Khan’s father, Salim Khan, is one of Bollywood’s most legendary screenwriters. Through his partnership with co-writer Javed Akhtar, Salim is credited with having paved the path for the Indian film industry’s blockbuster format in the 1970s. Something his son now rules the roost of. More importantly, the Salim-Javed duo also created the persona of the “angry young man” for Bollywood megastar Amitabh Bachchan in the 1970s, reflecting the angst of the average Indian. In choosing to be the ordinary man’s “hero” as opposed to a thespian in new Bollywood, Salman Khan remains tightly linked to his father’s oeuvre. Thanks dad. 

if you go

The flights

Air Astana flies direct from Dubai to Almaty from Dh2,440 per person return, and to Astana (via Almaty) from Dh2,930 return, both including taxes. 

The hotels

Rooms at the Ritz-Carlton Almaty cost from Dh1,944 per night including taxes; and in Astana the new Ritz-Carlton Astana (www.marriott) costs from Dh1,325; alternatively, the new St Regis Astana costs from Dh1,458 per night including taxes. 

When to visit

March-May and September-November

Visas

Citizens of many countries, including the UAE do not need a visa to enter Kazakhstan for up to 30 days. Contact the nearest Kazakhstan embassy or consulate.

What's in the deal?

Agreement aims to boost trade by £25.5bn a year in the long run, compared with a total of £42.6bn in 2024

India will slash levies on medical devices, machinery, cosmetics, soft drinks and lamb.

India will also cut automotive tariffs to 10% under a quota from over 100% currently.

Indian employees in the UK will receive three years exemption from social security payments

India expects 99% of exports to benefit from zero duty, raising opportunities for textiles, marine products, footwear and jewellery

Killing of Qassem Suleimani
Match info:

Manchester City 2
Sterling (8'), Walker (52')

Newcastle United 1
Yedlin (30')

The specs: Macan Turbo

Engine: Dual synchronous electric motors
Power: 639hp
Torque: 1,130Nm
Transmission: Single-speed automatic
Touring range: 591km
Price: From Dh412,500
On sale: Deliveries start in October

Results

2pm: Handicap (PA) Dh80,000 1,600m; Winner: AF Al Baher, Bernardo Pinheiro (jockey), Ernst Oertel (trainer).

2.30pm: Handicap (TB) Dh100,000 1,600m; Winner: Talento Puma, Xavier Ziani, Salem bin Ghadayer.

3pm: Handicap (TB) Dh90,000 1,950m; Winner: Tailor’s Row, Royston Ffrench, Salem bin Ghadayer.

3.30pm: Jebel Ali Stakes Listed (TB) Dh500,000 1,950m; Winner: Mark Of Approval, Patrick Cosgrave, Mahmood Hussain.

4pm: Conditions (TB) Dh125,000 1,400m; Winner: Dead-heat Raakez, Jim Crowley, Nicholas Bachalard/Attribution, Xavier Ziani, Salem bin Ghadayer.

4.30pm: Jebel Ali Sprint (TB) Dh500,000 1,000m; Winner: AlKaraama, Antonio Fresu, Musabah Al Muhairi.

5pm: Handicap (TB) Dh100,000 1,200m; Winner: Wafy, Richard Mullen, Satish Seemar.

5.30pm: Handicap (TB) Dh90,000 1,400m; Winner: Cachao, Tadhg O’Shea, Satish Seemar.

COMPANY%20PROFILE
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Classification from Tour de France after Stage 17

1. Chris Froome (Britain / Team Sky) 73:27:26"

2. Rigoberto Uran (Colombia / Cannondale-Drapac) 27"

3. Romain Bardet (France / AG2R La Mondiale)

4. Fabio Aru (Italy / Astana Pro Team) 53"

5. Mikel Landa (Spain / Team Sky) 1:24"

The Bio

Hometown: Bogota, Colombia
Favourite place to relax in UAE: the desert around Al Mleiha in Sharjah or the eastern mangroves in Abu Dhabi
The one book everyone should read: 100 Years of Solitude by Gabriel Garcia Marquez. It will make your mind fly
Favourite documentary: Chasing Coral by Jeff Orlowski. It's a good reality check about one of the most valued ecosystems for humanity

More on Coronavirus in France
The biog

Favourite Quote: “Real victories are those that protect human life, not those that result from its destruction emerge from its ashes,” by The late king Hussain of Jordan.

Favourite Hobby: Writing and cooking

Favourite Book: The Prophet by Gibran Khalil Gibran

MATCH INFO

Al Jazira 3 (O Abdulrahman 43', Kenno 82', Mabkhout 90 4')

Al Ain 1 (Laba 39')

Red cards: Bandar Al Ahbabi (Al Ain)

Kareem Shaheen on Canada
Teri%20Baaton%20Mein%20Aisa%20Uljha%20Jiya
%3Cp%3E%3Cstrong%3EDirectors%3A%3C%2Fstrong%3E%20Amit%20Joshi%20and%20Aradhana%20Sah%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ECast%3A%3C%2Fstrong%3E%20Shahid%20Kapoor%2C%20Kriti%20Sanon%2C%20Dharmendra%2C%20Dimple%20Kapadia%2C%20Rakesh%20Bedi%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A

THE SPECS

Engine: Four-cylinder 2.5-litre

Transmission: Seven-speed auto

Power: 165hp

Torque: 241Nm

Price: Dh99,900 to Dh134,000

On sale: now

Killing of Qassem Suleimani
Updated: November 26, 2022, 4:30 AM`
TurkeyInflationEconomy