According to people familiar with the effort, Turkey’s big state banks have set employee performance targets as they urge clients to convert foreign currencies into lira under a deposit-protection plan introduced last month to stem a currency crisis.
According to that person, the government has tweaked the program a few times in the last month to speed it up. It is considering shortening the minimum duration for deposits to qualify from three months to two months.
The Treasury administers the program and supervises the state banks. It did not immediately respond to questions about employee targets or possible shorter minimum deposit durations. Both private and public banks have incentives to promote the plan. However, the country’s three largest state banks may hold the key to its success.
Ziraat Bank declined to comment, while Vakif Bank and Halk Bank did not respond to Friday’s requests.
Turkey’s rules prohibit banks from pushing specific products to clients. One person familiar with the situation described the targets as unofficial.
As a result of the lira’s depreciation, inflation soared above 36% last month. This depleted Turks’ savings and upended household and corporate budgets.
According to Fitch rating analyst Erich Arispe, the plan provided some relief to the lira, slowed dollarisation, and reduced risks to bank funding. Still, it failed to address the core issue of policy uncertainty and profoundly negative actual rates.
To support the scheme, the government has waived the interest cap on lira deposits converted from hard currencies. Moreover, it allowed those converted from unprotected lira accounts to carry an additional 3% on top of the central bank’s 14 percent policy rate.
The central bank also offers higher interest on a portion of required lira reserves converted from foreign exchange. Furthermore, it will charge a 1.5 percent penalty on the dollar and euro deposits that do not meet a 10% conversion threshold by April 15.
State banks offered up to 19 percent; Private banks up to 26 percent on protected lira accounts converted from foreign currencies to entice customers.
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