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Turkey working to ease banks’ capital strains amid lira crash: Sources

Turkey’s authorities are working on possible relief measures for banks caught between a currency crash and existing capital requirements, including a potential capital injection for state banks, according to three sources familiar with discussions.

The Banking Regulation and Supervision Agency (BDDK) is considering adding more flexibility around the capital adequacy ratio (CAR), which is high relative to global peers at 12 percent, said two banking sources close to the matter.

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For public lenders – which analysts say face the most stress – a planned capital infusion should ease CAR pressure, though it was unclear how much would be needed given the rapid currency sell-off, said a banker and a senior economy official.

The BDDK’s plan is not finalized, the sources said, requesting anonymity.

The BDDK and Ministry of Finance were not immediately available to comment. Ziraat Bank declined to comment, while the other two big state lenders – Vakif Bank and Halk Bank – were not immediately available.

The moves are meant to stabilize banks and position state lenders especially to boost lending in line with a series of unorthodox interest-rate cuts by the central bank that triggered the currency sell-off.

Despite widespread criticism from economists and opposition lawmakers, President Recep Tayyip Erdogan has pressed for the monetary easing to boost credit, exports and growth ahead of elections in 2023.

The lira has lost 55 percent of its value against the dollar this year, including nearly 40 percent in the last month alone. The sharp depreciation has sent the lira-equivalent value of foreign currency loans soaring, putting pressure on CARs, which are measured in local currency.

Focus on state lenders

Analysts have warned that strains have grown in the banking sector, in which state players have become more dominant in recent years.

“Turkish banks will face higher pressure on capital (and) public banks will suffer the most,” said Regina Argenio, director of financial institutions ratings in the region at S&P Global Ratings.

“When we start to consider the impact of the lira depreciation and the impact of the asset deterioration the ratio looks much weaker than what it looks like initially,” she said in a webcast on Thursday.

Still, Argenio said, forbearance in the calculation of the CAR means past foreign-exchange rates can be used, which would delay the impact of the recent lira sell-off.

BDDK data from before the sell-off gained steam in October shows the sector’s CAR was 17 percent, and 15 percent for deposit-taking public banks.

“The planned capital injection will also relieve the capital adequacy ratio of public banks,” said one of the banking sources.

The senior economy official said the size of the third capital injection in three years for state banks was not yet clear.

“Each banks’ balance sheet will be examined to clarify their resources,” the official said. “After the capital support, public banks will be more active in offering loans … and will continue promoting growth and employment.”

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Russian ruble holds steady at 96 against the US dollar ahead of tax payments

The Russian ruble steadied near 96 to the dollar on Tuesday, trading in a narrow band, supported by upcoming tax payments and high oil prices.
At 0710 GMT, the ruble was 0.2 percent stronger against the dollar at 96.10 and had gained 0.3 percent to trade at 101.69 versus the euro. It had firmed 0.1 percent against the yuan to 13.13.
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Month-end tax payments, that usually see exporters convert foreign currency revenues to pay local liabilities, support the ruble, but the currency can slide early in the month once the period has passed.
The ruble has also now lost the temporary support of higher sales of foreign currency than usual by the central bank, which was selling around 21.4 billion rubles of yuan a day until the start of this week.
“At the end of the week, when the tax period ends, there is a high likelihood of the resumption of the national currency’s smooth devaluation,” said Alor Broker’s Alexei Antonov.
Brent crude oil, a global benchmark for Russia’s main export, was down 1.1 percent at $92.23 a barrel.
Russian stock indexes were lower.
The dollar denominated RTS index was down 0.5 percent to 992.5 points.

The ruble based MOEX Russian index was 0.6 percent lower at 3,028.8 points.
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Digital, electric solutions can cut carbon emissions in office buildings by 70 pct

Retrofitting buildings using a digital-first approach is the best pathway to decarbonization, according to new research from Schneider Electric, the leader in the digital transformation of energy management and automation.
Buildings represent an estimated 37 percent of global carbon emissions, and as about half of today’s buildings are still likely to be in use in 2050, the sector must urgently reduce operational carbon emissions, by making buildings more energy efficient.
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The research findings show that deploying Schneider Electric’s digital building and power management solutions in existing office buildings could reduce their operational carbon emissions by up to 42 percent with a payback period of less than three years. If fossil fuel-powered heating technologies are replaced with electric-powered alternatives, and a microgrid with local renewable energy sources is installed, all-electric, all-digital buildings will see an additional 28 percent reduction in operational carbon emissions resulting in a total reduction of up to 70 percent.

Mike Kazmierczak, Vice President of the Digital Energy Decarbonization Office, the team leading the science-based research and product innovation to accelerate the energy transition within Schneider Electric’s Digital Energy division, explained that, “Tackling operational emissions is the number-one lever to decarbonize existing buildings at scale and achieve net-zero emissions targets by 2050. This breakthrough research reveals that reducing carbon emissions by up to 70 percent is feasible if we transform our existing building stock into energy-efficient, fully-electrified, and digitized assets.”
The research, carried out with the global design firm WSP, is based on modeling the energy performance and carbon emissions of a large office building built in the early 2000s across various US Climate Zones. This digital approach to building renovations is, however, applicable to all building types and climates, and is, therefore, the most effective building decarbonization strategy, yielding fast results with lower ‘upfront carbon.’
Renovating through the deployment of digital technologies is not only less disruptive to daily operations, but also more effective from a lifecycle carbon perspective. Failing to rapidly decarbonize buildings could also result in stranded assets that lose value and are unattractive to both investors and tenants.
Furthermore, recent research from the Boston University Institute for Global Sustainability and the Schneider Electric Sustainability Research Institute estimates that there is a sizable potential to create new jobs through the transition to low-carbon buildings.

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UK’s cost of living crisis to significantly increase early death: Study 

The UK’s inflation-fueled cost-of-living crisis is set to “cut lives short” and “significantly widen the wealth-health gap”, according to a study published by open access journal BMJ Public Health on Monday.

Modelling conducted for the study predicted that the proportion of people “dying before their time” (under the age of 75) will rise by nearly 6.5 percent due to the sustained period of high prices.

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The most deprived households will experience four times the number of extra deaths than the wealthiest households, it forecast, with the poorest having to spend a larger proportion of their income on energy, the cost of which has soared.

The researchers studied the impact of inflation on death rates in Scotland in 2022-3, with and without mitigating measures such as government support to help cut household bills.

The collected data was then used to model various potential future outcomes on life expectancy and inequalities for the UK as a whole if different mitigating policies were implemented.

Without any mitigation, the model found that inflation could increase deaths by five percent in the least deprived areas and by 23 percent in the most deprived — coming down to two percent and eight percent with mitigation, with an overall rate of around 6.5 percent.

Overall life expectancy would also fall in each case, it added.

“Our analysis contributes to evidence that the economy matters for population health,” said the researchers.

“The mortality impacts of inflation and real-terms income reduction are likely to be large and negative, with marked inequalities in how these are experienced.

“Implemented public policy responses are not sufficient to protect health and prevent widening inequalities,” they added.

UK inflation unexpectedly slowed in August to 6.7 percent from a high of 11.1 percent, but remains the highest in the G7, fueled by coronavirus lockdowns, Brexit and the war in Ukraine.

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