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Despite Fed Delay, Morgan Stanley Has Turkey Banks on Notice

  • Costs to rise on external borrowing that tripled since 2009
  • Balance sheets resilient, so funding crunch unlikely
Updated on

When the Federal Reserve finally gets around to raising interest rates, Morgan Stanley says that Turkey’s private banks are among the most exposed institutions in a country that’s already unusually vulnerable.

Compared to their state-owned counterparts, Turkey’s private lenders are more heavily indebted abroad, leaving them sensitive to rising interest rates that would make it more expensive to roll over their debt. With 83 percent of the banking industry’s external debt taken by private institutions, they’ll feel the brunt of any liquidity drought.