Turkish banks hire EY as asset manager option gains steam for NPLs

ISTANBUL, Feb 21 (Reuters) – Turkey’s banks have hired Ernst & Young to analyse launching an asset management company (AMC) to house billions of dollars of bad debt, an idea that has gained traction to help solve a problem that has loomed since a 2018 currency crisis.

The Banks Association of Turkey confirmed to Reuters on Friday it hired the accounting firm.

Ernst & Young was hired earlier this month and it aims to publish a preliminary report on the viability of an AMC in March or April, two people familiar with the plan said separately.

One of the sources said some in the banking sector are calling the idea a “mega AMC” since it would house non-performing loans (NPLs) from an array of Turkish companies including those in the hard-hit construction and energy sectors.

“Ernst & Young has been picked as an advisor for establishing an AMC, and its structure is still under discussion,” said the other source. Banks want it to focus on loans to small and medium-sized companies (SMEs) or corporate loans, the person added.

Ernst & Young declined to comment.

Reuters first reported in September that state and private lenders were considering creating an AMC as one option to help clean up some $25 billion in NPLs lingering on their books. The 2018 crisis sliced 30% off the Turkish lira and left many companies unable to service foreign-currency loans.

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