LONDON (Reuters) - Investigations by U.S. authorities into a group of Turkish traders and bankers accused to helping Iran evade sanctions could put Turkish banks’ ratings under pressure if the situation escalates, Fitch said on Thursday.
“Given the noise around the U.S. investigations, if there was a case of reputational damage resulting in diminished access to market or a large fine that wasn’t offset by state support, it could result in negative rating pressure,” said Lindsey Liddell, Fitch’s director of financial institutions.
U.S. prosecutors have charged Turkish gold trader, Reza Zarrab, and his alleged co-conspirators of handling hundreds of millions of dollars for Iran’s government and Iranian entities from 2010 to 2015, in a scheme to evade U.S. sanctions.
Nine people have been criminally charged, but only Zarrab and a banker from Turkey’s Halkbank (HALKB.IS), Mehmet Hakan Atilla, are in U.S. custody. Both deny the charges.
Liddell added that capital buffers in the Turkish banking sector were currently “sufficient to absorb moderate shocks.”
“However, risks to bank capitalization remain in the event of further lira devaluation or higher than expected non-performing loan growth.”
Reporting by Claire Milhench; writing by Marc Jones, editing by Karin Strohecker