Posted by meb at February 25th, 2013

Turkey’s Competition Authority (RK) hears the defense today of a dozen banks under investigation for alleged collusion in setting loan rates.
The RK will hear the banks’ cases at 10 a.m. at its headquarters in Ankara. The verdict is expected in the following 15 days. RK said back in November it would seek to issue a collective fine worth TL 4.8 billion ($2.65 billion) if it finds the banks guilty of colluding on interest rates. The 12 banks, which include the country’s four largest banks — Akbank, Garanti Bank, Ä°ÅŸ Bankası and Ziraat Bankası — allegedly agreed to cooperate and set interest rates as high as 14 percent for customers, an RK investigation dating back to November 2011 says. The 14 percent interest rate that the banks allegedly set approaches the upper end of the government’s interest rate corridor, and though the number is not illegal, the collusion between banks to keep the rate at an upper limit is strictly against the country’s banking regulations. The other banks in the inquiry include DenizBank, Finansbank, HSBC, ING, Türk Ekonomi Bankası (TEB), HalkBank, VakıfBank and YapıKredi.

The investigation comes at a time of heightened pressure for the country’s strongest banks as they find themselves faced with the competition of a growing number of foreign banks applying for operating licenses in the country. Underlying the interest of foreign lenders is high profitability in Turkish finance markets. Turkish banks earned TL 23.64 billion ($13 billion) in profits last year, a year-on-year 19.2 percent increase. In addition, Turkish banking industry assets totaled $770 billion by the end of 2012, a 12.6 percent increase over 2011.

If the RK investigation finds the banks guilty, it will not be the first time the body has fined some of the country’s largest banks. In 2011, the RK fined Akbank, Garanti, Ä°ÅŸ Bankası, VakıfBank, YapıKredi, DenizBank and Finansbank a collective TL 72.3 million over a similar collusion agreement.