November 27, 2019 / 7:49 AM / 18 days ago

Turkish watchdog takes step enabling banks to remove NPLs from books

ISTANBUL, Nov 27 (Reuters) - Turkey’s BDDK banking watchdog changed loan classification regulations so that banks are able to remove from their books “Group 5” classified non-performing loans (NPL), marking another step to clean up bad debt from last year’s currency crisis.

The regulatory change was published in Turkey’s Official Gazette on Wednesday.

The move “allows Turkish banks to remove Group 5 non-performing loans from their NPL books should the borrower default and there be no possibility of recovery for the foreseeable future,” said Seker Invest, an investment firm.

“This should be considered as an accounting practice, and banks’ right to collect defaulted debt will be unchanged,” it said.

The currency crisis cut some 30% off the value of the Turkish lira last year, leaving many companies unable to service foreign-currency debt that remains on lenders’ balance sheets.

Reporting by Ebru Tuncay; Writing by Daren Butler; Editing by Jonathan Spicer

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