Turkey’s lenders slashing interest rates one by one

ISTANBUL

Turkey’s leading lenders have announced interest rate cuts in loans one-by-one, as the government calls for banks accordingly to “boost economic activity,” ahead of a key meeting between Prime Minister Binali Yıldırım and top bank representatives late on Nov. 1. 

The rate cuts by at least five banks came after Yıldırım criticized lenders in a speech last week, asking them to give voice to the real sector and stop loansharking.

The Treasury will not take money from banks forever, Yıldırım said in late October, adding that banks’ main mission must be to pour money into the real economy.

“Turkey has been overcoming exceptional conditions. Despite the recent failed coup attempt, its economy has not deteriorated. On the contrary, our economy has been growing while the world economy shrinks,” he said, adding that applying higher interest rates would bring nothing but “speculative gains.” 

Deputy Prime Minister Nurettin Canikli later said the government has thoroughly followed the rates without making any interference.  

“We have been in dialogue with lenders. Our purpose is to accelerate the interest rate cuts, mainly on deposit rates, which are higher than the rate of inflation in Turkey,” he said. 

According to prime ministry sources, top bank representatives are scheduled to meet with Yıldırım and senior economy officials in Ankara on late Nov. 1, where rates would be the main topic on the agenda. 

İş Bank became one of the first lenders to slash the rates further, followed by other major banks, including Garanti Bank, Akbank and Yapı Kredi Bank. 

İş Bank CEO Adnan Bali said in a press meeting that revealed new rates, the government has taken a number of measures to revive economic activity and would follow policies in line with these measures, on Oct. 31. 

“The financial system must act in a constructive manner,” he said. 

Bali noted that İş Bank decided to slash rates after a one-week preparation process. 

The lender cut its rates for housing loans from 0.95 percent to 0.9 percent, for automotive loans from 1.18 percent to 1.1 percent and for consumer loans 1.39-1.2 percent to 1.35-1.15 percent. 

The rates for small and medium sized enterprises were also cut by the bank.  

Akbank also cut its rates for housing loans for up to two years in installments to 0.9 percent. For five years of installment, the rate will be 0.93, while the rate was set at 0.95 percent for seven years and 0.97 percent for more than seven years. 

Yapı Kredi slashed its rates for housing loans with installment due between one and six months to 0.9 percent and 0.92 percent between 61 and 120 months in installments. 

For consumer loans that are more than 25,000 Turkish Liras, Yapı Kredi will offer rates that start from 1.19 percent. 

Vakıf Bank also reduced rates for consumer loans from 1.26 percent to 1.15 percent and for automotive loans from 1.15 percent to 1.1 percent. The lender also slashed its credit card rates from 2.02 percent to 1.98 percent. 

TEB also has made significant decreases in its interest rates.