Turkey’s big state banks have set employee performance targets as they urge clients to convert foreign currencies into lira under a deposit-protection plan introduced last month to stem a currency crisis, according to people familiar with the effort.
More than half a dozen bankers, customers and others familiar with the matter interviewed by Reuters describe a concerted push to boost the uptake of the scheme, which President Tayyip Erdogan unveiled when the lira tumbled to a record low in mid-December.
“The conversion from forex to lira was added as an employee performance criteria,” said one banker, who added that they were shown statistics from rival banks to encourage competition.
“We are being called numerous times every day and asked how much we converted,” the banker said, requesting anonymity as did the others given they were not authorised to speak publicly.
A second person familiar with the matter said bank general managers were calling clients with at least $5 million in foreign deposits to pitch the new programme, while others approached those with smaller holdings.
The government has tweaked the programme a few times over the last month to accelerate it and is considering shortening, from three months now, the minimum duration for deposits to qualify, that person said.
Under the scheme, the Treasury and central bank guarantee deposits with a three to 12 month duration against foreign exchange-related losses in an effort to halt a flight to the dollar amid soaring inflation.
Along with currency interventions last month, the scheme helped spark a sharp lira rally. Still, the currency ended the year down 44%, the worst performer in emerging markets.
The Treasury, which administers the program and oversees the state banks, did not immediately comment on employee targets nor on possibly shorter minimum deposit durations.
In order to boost uptake, the government added corporate currency accounts to the scheme last week.
Carrots and Sticks
The currency crisis was sparked by a series of unorthodox interest rate cuts urged by Erdogan under a new economic policy that stresses exports, credit and investment.
Lira’s weakness in turn sent inflation soaring above 36% last month, depleting Turks’ savings and upending budgets of households and companies.
Fitch Ratings analyst Erich Arispe said the plan gave the lira some relief, slowed dollarisation and reduced risks to bank funding, but failed to address the core problem of policy uncertainty and deeply negative real rates.