WASHINGTON (Sputnik) — Turkish banks will need injections of additional capital to meet international rules on bank reserves known as Basel III that are set for implementation in 2019, Moody’s Investors Service said in a press release on Thursday.
"Turkish banks' lending growth is outpacing their capital creation and we expect capital levels to decline over the next three to five years," Moody’s Assistant Vice President Arif Bekiroglu said in the release.
Basel III refers to a set of capital requirements for international banks that was drafted by the Swiss-based Bank for International Settlements following the near collapse of the US and global financial systems in 2008.
Capital refers to the cushion that allows banks to absorb unexpected losses.
Moody’s said the capital shortage, as well as losses in recent years, threatens the ability of Turkish banks to expand credit that is needed for the nation’s economy to grow.
