Turkish government eyes Isbank, EU budget problems

The Turkish government’s plans to transfer the opposition party’s stake in a major bank to the Treasury adds to the evidence that it is trying to gain more leverage over the banking sector. This is likely to raise further concerns about the current rapid pace of credit growth and adds more weight to our view that the central bank will be forced to hike interest rates later this year. Meanwhile, the negotiations on the EU budget for 2021-27 seem to be in disarray. It is almost certain that Central and Eastern Europe will receive fewer funds, but the longer it takes to finalise an agreement, the greater the risk of a messy transition to the next funding window.