Fitch: Challenges ahead for Turkey banks

Fitch Ratings said in a special report that Turkey's banking sector faces a challenging near-term outlook, although the banking system is better positioned to meet operating pressures than it was during previous economic downturns.

Turkish banks do not have any exposure to U.S. subprime mortgages or other complex structured assets, Fitch said, and loan quality appears to be holding up well.

Turkey's banking system is largely retail-deposit funded, which is a strength in the current tight-liquidity environment, the agency said.

Although Turkey's banks are not reliant on wholesale international funding and foreign-exchange risks are well contained, there are some risks due to global de-leveraging, deteriorating global economic growth outlook and scarce funding, Fitch said.

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