Ziraat Bank makes biggest overseas loan deal by Turkish banks

Turkey’s Ziraat Bank signed a loan agreement with Deutsche Bank of Germany, providing 1.75 billion euros of external financing with a maturity of up to 5 years and marking the biggest foreign borrowing made by a Turkish bank.

Friday December 15 2023 09:24 pm

Duvar English

Turkey’s state lender Ziraat Bank announced on Dec. 15 that it has signed a 1.75 billion euro ($1.9 billion) loan and funding deal with Germany’s Deutsche Bank for up to five years.

Country’s largest lender by both assets and loans, Ziraat said the deal would help it continue to support exporters and other sectors that are a priority for economic development.

It is an early sign of international actors’ willingness to do business in the country as the government endeavours to return to more orthodox economic policies after the general elections on May, according to Bloomberg.

The deal will be the largest bilateral foreign borrowing by a Turkish bank. The loan will have a maturity of up to five years and will be signed in the near future, said the officials, who requested anonymity because the matter is private.

Since June, Turkey's newly-appointed central bank and cabinet leaders have launched a series of aggressive interest rate hikes and other regulatory changes meant to leave behind years of unorthodoxy under President Recep Tayyip Erdogan.

Since Mehmet Şimsek, a former Merrill Lynch strategist, took over as Finance Minister and Hafize Gaye Erkan as Central Bank Governor, Turkey has raised its benchmark interest rate by 30 percentage points to 40%, a move welcomed by financial markets.

Foreign investors - having long abandoned Turkish assets due to past policies - have begun tip-toeing back with bond purchases, driving Turkey's 5-year credit default swaps (CDS) to below 300 on Dec. 14 for the first time in years.

In September, Ziraat announced that it had secured a $625 million loan from two investment banks whose identities it did not disclose.