Bloomberg Intelligence issued a January 21 warning to Turkish banks

Pointing out that the total of the foreign currency deposits of the four private banks is 104 billion dollars, Thomas Noetzel said that this constitutes 60 percent of their total deposits. Noetzel said that if 10 percent of this is not converted to Turkish lira by January 21 and a total of 20 percent by March 18, banks will have to pay 1.5 percent of the required reserve commission. Emphasizing that 9 percent of İş Bank’s pre-tax profits are at risk when the third quarter financials are taken into account, Noetzel said that the remaining three private banks are also faced with the risk of a 5-6 percent decrease in their pre-tax profits.

Required reserve incentives for banks in TL deposits

The Central Bank of the Republic of Turkey announced that it would apply required reserve incentives to the amounts converted from foreign currency deposits and foreign currency participation fund accounts to time deposits and participation accounts. The following explanation was given regarding the amounts held in foreign currency in the required reserve and notice FX deposit accounts: "To receive a commission of 0.015 (1.5 percent) annually, up to the amount required to be kept for the liabilities of deposits and participation funds (excluding foreign bank deposits and participation funds) in US dollars, of foreign currency amounts held in US dollars, A commission of 0.015 (1.5 percent) per annum, up to the amount required to be kept for deposits/participation funds (excluding foreign bank deposits and participation funds) liabilities in foreign currency denominated in foreign currencies other than US dollars, Within the scope of the Communiqué No. 2021/14 on Supporting the Conversion of Turkish Lira Deposit and Participation Accounts, conversion from (existing since 20/12/2021) US dollar, Euro, and British Pound deposit accounts  and foreign currency participation fund accounts to Turkish Lira time deposits and participation accounts, the commissions mentioned above will not be applied until the end of 2022 for banks whose ratio has reached 10.00 percent as of 21/01/2022 (January 21) and 20.00 percent as of 18/03/2022 (March 18). It has been decided that the mentioned commissions will be calculated over the average balances related to the reserve requirement period. The accrual will be made quarterly at the end of March, June, September, and December, and will be collected on the first business day following the quarterly period. The changes will be effective from the liability period dated 24/12/2021. The said changes will be effective from the liability period of December 24, 2021, the plant of which will start on January 7, 2022.