Problems at Bank Asya turn attention to Turkey’s bank risks

The near-collapse of the Turkish Islamic bank, Bank Asya, seems to be an isolated incident, the result of political feuding more than bad credit decisions. But it has put the spotlight back onto Turkey’s banking sector. And while the improvement in commercial banks’ health over the past decade has been one of the AK party’s success stories, more recently risks have started to build up again. In particular, lenders have become increasingly reliant on wholesale financing from abroad to fund credit growth.