2016年-世界发展银行全球_Financial_Sector_Assessment___Turkey_44页_2mb

Financial Sector Assessment of Turkey (December 2016)

Core Content

The Financial Sector Assessment Program (FSAP) conducted by the IMF and World Bank in 2016 identified key challenges and opportunities for the Turkish financial system. The assessment highlighted the need to reduce reliance on foreign currency financing and improve the maturity and diversity of funding instruments for banks and firms. Persistent inflation, exchange rate volatility, and low national savings have driven a heavy dependence on external capital and short-term deposits, increasing financial stability risks.

The report also emphasized the importance of strengthening the regulatory and supervisory framework, improving systemic risk oversight, and enhancing financial market infrastructure. It outlined recommendations to improve the resilience and effectiveness of the financial sector through policy reforms and institutional improvements.

Main Recommendations

Policies Addressing Resilience, Integrity and Financial Sector Effectiveness

• Banking Supervision

  • Revise legislation to further strengthen BRSA independence.
  • Deepen and broaden the risk assessment nature of banking inspections and follow-up.
  • Strengthen corporate governance rules and enforcement.
  • Evaluate and revise the definition of credit classifications and strengthen enforcement.

• Insurance Supervision

  • Improve independence, governance, and accountability of the insurance supervisor.
  • Increase resources for internal control functions.
  • Integrate offsite, onsite, and enforcement activities within a single supervisory organization.
  • Develop a risk-based, group-wide supervisory framework.
  • Strengthen corporate governance requirements and ensure key internal control functions are established and have appropriate independence and resources.

• Financial Market Infrastructure

  • Improve risk management of EFT/ESTS liquidity and FMI interlinkages.
  • Fine-tune the legal framework for customer asset protection in Takasbank.
  • Strengthen the governance framework considering system-wide performance indicators.
  • Address risk management among FMIs in a more integrated way.
  • Explore and implement liquidity mechanisms to address concentration of payments at the end of the day.
  • Improve default management and operational risk management.
  • Implement effective monitoring arrangements for tiered participation.
  • Introduce efficiency measures in the infrastructure for government securities.

• Systemic Risk Oversight

  • Strengthen macroprudential measures to lower foreign exchange risk.
  • Enhance FSC governance and powers, provide a clear financial stability objective to all members, and limit the role of the Council of Ministers.
  • Develop procedures for improved systemic risk assessment and coordination of macroprudential policies.
  • Agree to table policy proposals for ex ante FSC discussion and request formal responses to recommendations.
  • Base policy tool selection on an integrated assessment of systemic risk and cost-benefit analysis of alternatives.
  • Strengthen transparency, including the publication of an Annual Report.

• Managing Systemic Liquidity

  • Orient liquidity provision towards a single key policy rate.
  • Increase net reserves so that gross reserves are within the range of 100-150 percent of the ARA metric.
  • Improve ELA capacity and redefine FX lending facility as ELA with increased conditionality.

• Financial Crisis Management

  • Strengthen recovery and resolution planning and enhance resolution powers.
  • Strengthen domestic and cross-border coordination arrangements.

• AML-CFT

  • Determine the reason for low ML conviction rates and plan to address them.
  • Introduce customer due diligence requirements for politically exposed persons.
  • Ensure compliance with UNSCR requirements and strengthen border controls on currency transportation.

• Broadening Markets and Services

  • Developing / Deepening Capital Markets

    • Support and promote BIST overnight repo futures and introduce an organized call market.
    • Strengthen issuance regulations and disclosure of corporate bonds.
    • Enhance governance standards and launch a special segment for firms listed in BIST.

  • Promoting Financial Inclusion

    • Target underserved segments, enhance public/private coordination, and strengthen M&E framework.
    • Ensure a level playing field between banks and non-banks.
    • Improve oversight of credit reporting systems, retail payment services, and design of electronic instruments for government payments.

  • Islamic Finance

    • Enhance regulatory and governance framework.
    • Build capacity, financial awareness, and literacy.

Key Challenges and Vulnerabilities

• Macrofinancial Outlook

  • The Turkish economy slowed significantly after strong performance in 2015, due to domestic and external shocks, and increasing private indebtedness.
  • Economic growth is projected to decline to 2.7 percent in 2016.
  • External vulnerabilities remain high, with a current account deficit of 4.5 percent of GDP and a high external debt burden.
  • FX reserves are low relative to external debt and FX refinancing needs, and GIR is below the IMF ARA metric.
  • Risks to the outlook are tilted to the downside due to large external financing needs, low net international reserves, weak growth in key export markets, and a lower sovereign credit rating.

• Banking and Corporate Sectors

  • Banks account for over 90 percent of the financial system by asset ownership, but their business models have converged, increasing systemic exposure.
  • FX and NFC exposures have risen, while credit growth has shifted to corporate and SMEs.
  • Banks face rising asset quality challenges, with NPLs remaining between 2.5 and 3 percent of gross lending.
  • Restructured credits have increased from 1 to 3 percent of gross loans between 2011 and 2015.

• Non-Financial Corporates

  • NFCs have a high proportion of FX liabilities and low FX assets, leading to a negative net FX position.
  • Rising leverage and interest expenses have made NFCs vulnerable to funding and FX shocks.
  • Earnings have deteriorated due to TL depreciation and diverging interest rates between the U.S. and Europe.

• Households

  • Household credit remains a significant component of bank lending.
  • Debt-to-disposable income is rising, and loan losses on retail loans have increased by over 40 percent since 2011.

Stress Test Findings

• Banks with large capital buffers appear resilient to short-term economic shocks but may face significant capital shortfalls in the case of a protracted recession.
• Liquidity risks may exacerbate solvency pressures in such scenarios.
• Mid-to-large NFCs face difficulties in servicing debt due to higher interest expenses, TL depreciation, and reduced earnings in a recession.

Conclusion

The assessment underlines the importance of strengthening the regulatory and supervisory framework, improving systemic risk oversight, and enhancing financial market infrastructure to ensure the resilience and effectiveness of the Turkish financial sector. It also highlights the need for broader market development and financial inclusion initiatives to support long-term growth and stability.