Turk Telekom went bankrupt under the weight of its loans, which it could not repay. The amount of the “exposure” to the banks was $ 4.7 billion, resulting in the company’s management passing under the control of the banking institutions.
The news of the bankruptcy of such a large and historic company caused panic among a series of other firms, which follow similar tactics to those by Turk Telekom as they also collect in a Turkish lira and repay loans in dollars or euros.
Turkey’s currency fell by more than 5 per cent in a pattern similar to the crash in the lira earlier this month, amid swirling concern over the country’s economy and financial markets.
The lira drooped to TL6.80 against the dollar — marking a new low for the week and creeping yet closer to the historic trough of TL7.2149 that was reached earlier in August.
The currency has tumbled more than 11 per cent this week as local investors have returned following a four-and-a-half day closure for Eid al-Adha. It is down by more than a quarter for August in a record fall for the ‘new lira’, which came into being after a re-denomination in 2005. This month’s drop is the biggest for Turkey’s national currency since the economic crisis in 2001, according to Reuters data.
The sell-off was also exacerbated by a Reuters report that the deputy governor of the central bank, Erkan Kilimci, is preparing to resign for a role at the Development Bank of Turkey.