Turkey, Economy, Europe

Turkey's JCR Eurasia move: 3 birds with 1 stone

Turkey buys 85.05% of Japan’s credit rating agency, analysts see it logical decision

Murat Aslan   | 29.11.2019
Turkey's JCR Eurasia move: 3 birds with 1 stone

ISTANBUL 

Turkey's latest move on Friday towards buying the majority shares of JCR Eurasia, the local unit of Japan Credit Rating Agency, was evaluated as a wise step in terms of grabbing the advantages of time and cost.

The plan could be considered a logical step taken by Turkey in having a national credit rating agency in the global arena.

Sources familiar with the topic said instead of starting from scratch, Turkey made a logical decision by acquiring 85.05% of JCR Eurasia, owning a rating agency, which has a credibility in international markets.

The analysts emphasized that it will take at least four years for Turkey to manage the recruitment of employees, data collection and the approval of the country’s Banking Regulation and Supervision Agency of models.

They believe that partnering with the existing company, Turkey will benefit the advantage of both time and cost benefit.

According to the analysts, the company will determine the credit worthiness of customers using loans from the financial sector, and the ratings of sovereign debt or banks will not be included in this rating.

For a long time, Turkey has criticized international agencies, saying they might be subjective and do non-transparent evaluation from time to time, resulting in an unfair decrease of confidence in some countries' economies.

Developing countries' moves in establishing rating agencies 

Throughout years, credit rating agencies have been rating the assets of the companies or states examining based on certain criteria.

The US-based Fitch Ratings, Moody's and Standard & Poor's are the prominent credit rating agencies worldwide, with many developing countries seeking to have their own indigenous bodies in this area.

Dagong in China, CRISIL in India and GCR in South Africa were established as the credit rating agencies before 2000s, while Russia launched ACRA in 2015.

The U.S.- based credit rating agencies, which were criticized due to the wrong credit ratings they handed down during the 2008 global financial crisis, were also chided at times for their biased attitude towards developing countries.

It is also expected that these notes will be used in banks' allocation and monitoring processes to increase productivity and, in the long run, contribute to the rapid and accurate measurement of credit risk of Small and Medium Enterprises.

Borsa Istanbul will hold 18.5% of the company, while Japan Credit Rating Agency will hold 14.95%. Turkish private and state lenders, including Ziraat Bank, Garanti BBVA and Yapi Kredi will also hold stakes in the company with 2.86%, said a statement by The Banks Association of Turkey.

* Writing and contributions by Aysu Bicer from Ankara

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