Standard & Poor's Ratings Services said in a June 2006 report that the turbulence recently seen in Türkiye's financial markets was not unexpected, and that the country's banking sector is now significantly more resilient than it was during earlier crises.
The ratings agency said that despite the instability, Türkiye remains an appealing destination for foreign investors, thanks to ongoing reforms and the market's underlying growth potential.
S&P credit analyst Magar Kouyoumdjian pointed to several factors that had unsettled markets: a delay in naming a new central bank governor, the killing of a senior judge, and a presidential veto of key social security reform provisions, all of which raised concerns about the central bank's political independence. These events unfolded as the Turkish lira was already seen by many as overvalued following years of appreciation.
The report credited structural improvements in the banking sector for limiting the damage. Banks have largely stopped taking on large short currency positions, reducing exposure to foreign-exchange losses. The elimination of problematic insider lending at some private banks, and the resolution of subsidized lending and insolvency issues at certain state-owned banks, have left the system better positioned to absorb short-term pressure.
Historical summary. TurkishPress restated this wire report, first published in June 2006, in its own words.