Some Turkish state-run banks begin recalling loans: business leader

"Some of our members sent us letters telling that some state-run banks had begun to recall their loans," Referans quoted Kucuk as saying.

 

"We don't want to act hastily, but we need to bring to light the things we are hearing. If saying this would also encourage other banks to recall loans back, it would create negativity. However, we are raising the issue to prevent such situations from happening," he added.

 

Turkey’s Finance Minister Kemal Unakitan recently warned Turkish banks against recalling loans to prevent a credit squeeze. "I do hope you do not recall your loans," he had urged.Â

 

Ertugrul Ozkok, editor-in-chief of Hurriyet daily has also mentioned the liquidity problems facing state-run banks and said one of the biggest banks halted lending activities some months before.

 

Kucuk said they were concerned over a cut in credit awarded to industrialists and they would hold meeting with the head of Turkey's Banking Regulation and Supervision Agency, the Turkish Central Bank, the bank's governor, and the Association of Turkey in an effort to highlight the risks of loan recalls.

 

"The situation will turn into a crisis if credit is cut to real sector," he added.

 

Kucuk said the banking system, which is stronger now when compared to the past, would not be sufficient to avert a crisis if the real sector faces a financial squeeze. "It does not matter how prepared you are," he said.