KKM hill with option in the middle of CBRT and banks

Uncertainty about how the optional Currency Protected Deposit (KKM) processes, restricted by the CBRT, will be taken into account and whether they will continue to be carried out, was discussed at the meeting of the banks and the Central Bank administration yesterday….

BLOOMBERG HT/SPECIAL- With the latest regulations made by the Central Bank of the Republic of Turkey, the optional KKM anonymity that started in the banking sector was discussed at the meeting of the bank managers and the CBRT administration on Monday evening. According to the information obtained by Bloomberg HT, the main theme of the meeting was the framework and implementation of this regulation.

At the meeting, where the restrictions brought include live option KKMs, and which types of these processes caused discomfort in the Central Bank, the banks expressed their reservations about the issue.

In the meeting, where the Central Bank executives conveyed the relations of the regulation, it was stated that the discomfort was caused by the demand for foreign exchange in the market.

According to the information obtained by Bloomberg HT, it was emphasized that the regulation was made on the grounds that while performing this process, some banks that make optional KKM exchange foreign currency to their customers and give Turkish lira to the Central Bank, and then they buy foreign currency from the market in an exact measure in order to hedge the position.

It has been stated that the regulation will be applied actively for banks that act in this form, while it is stated that there is no problem for banks that make the option with Turkish lira netting and manage them in their own positions.

It is mentioned that various proposals for the analysis of the problem were also discussed at the meeting. It is stated that a study will be conducted to make the Currency Protected Deposits more attractive in a model that will appeal to both investors and the CBRT and banks. It is also emphasized that this work, which is at the idea stage, will be examined for compliance with the legislation.

The Central Bank has made various arrangements to increase the Turkish lira weight in the balance sheets of banks, and within this framework, the Turkish lira burden can exceed 50 percent both legally and personally. under8 percent of the banks in the middle of the 50-60 percent, 3 percent of the banks announced that the committee will be applied.

In order to achieve these ratios, banks created options such as optional KKM, as well as swap and repo processes, to balance their foreign currency positions on or off the balance sheet.

In the last week of the year, the Central Bank ended these opportunities and emphasized that the exchange difference would not be paid if the optional KKM work was done in the transferred form.

After the negotiations with the banks in the middle of the CBRT, it is now unclear how banks will act in calculating their Turkish lira status.