Turkey's sovereign wealth fund has boosted the capital of five state-owned banks by 3.3 billion euros (3.7 billion dollars) to boost economic growth, Bloomberg reported.
According to the agency, the state-controlled fund bought the debts issued by the five lenders under the recapitalization program announced on Monday, which will see another 400 million euros flowing to Islamic (participatory) banks.
Turkish President Recep Tayyip Erdogan's administration is seeking to stimulate growth with cheap loans, entrusting banks with saving industries and helping consumers in the hope that private banks will follow.
"The plan does not create new funds for state banks, but it shifts one of the obligations in the budgets of the state banks to another commitment to increase the capital adequacy ratios, enabling them to obtain More lending power without eroding their capital reserves. "
According to the plan, the largest bank in the country, the Bank of agriculture, will receive €1.4 billion worth of bonds. The Bank of Creation also signed an agreement with the sovereign fund for a five-year loan of €900 million, and the first interest payment will be paid at maturity.
A bank will also receive €700 million in bonds, the restructured Development Bank and the Exim Bank (Turkish export bank) will receive five-year secondary loans worth €150 million each.
Under the plan, the Treasury Department issues special-purpose government bonds to the Stability Fund, which then sells banknotes to state lenders in exchange for secondary debts. Three Islamic banks will also receive funding, namely the Islamic Agriculture Bank, the Waqf Bank and Amlak Bank.