Turkish government-run Halkbank (Istanbul/HALKB) quickly secured an additional $1.1bn from international markets following the official dismissal of the long-running US criminal proceedings it faced over allegedly dodging sanctions on Iran, the lender said on August 25.

The resolution of the legal saga triggered a “rapid increase in the number of counterparties” willing to extend credit and trade debt instruments to Halkbank.

On June 17, Halkbank said that the dismissal of the US criminal case had been approved by the US District Court for the Southern District of New York. Therefore, the criminal case had been definitively and conclusively closed, it added.

On top of $3.9bn

Even prior to the formal dismissal of the charges, Halkbank was aggressively fortifying its liability structure. The bank disclosed that it proactively raised $3.9bn in external funding ahead of the ruling, leveraging bilateral credit agreements and subordinated Additional Tier 1 bond (AT1) issuances.

In June last year, Halkbank sold $700mn of a subordinated AT1 eurobond (XS3094751198) at a coupon rate of 9.30%.

The eurobond sale was Halkbank’s first since July 2016. Between July 2016 and June 2025, the lender remained out of the eurobond market. The bank also has no outstanding syndicated loan.

In June 2025, Fitch Ratings removed Halkbank from Rating Watch Negative (RWN) and assigned a stable outlook to the lender.

The rating agency recalled that the negative watch was assigned due to uncertainty over the timing and potential outcome of protracted US legal proceedings over the possible breach by Halkbank of US sanctions against Iran.

In December, Halkbank sold $300mn of an AT1 eurobond (XS3246998135) at a coupon rate of 8.90%. In March, it sold $210mn of subordinated AT1 eurobonds (XS3314690176) at a coupon rate of 8.30% and a yield-to-investor of 8.301% (priced at 99.9976).

In May, Halkbank said that it had so far this year obtained a total of $350mn under bilateral loan agreements with various international banks, each with a maturity of one-year.

Halkbank has a BB-/Stable rating from Fitch Ratings and a Ba3/Stable from Moody’s Ratings.

Non-deal roadshow

In July, the lender established a $5bn global medium-term note (GMTN) programme under which it can also sell bills and various papers abroad. In March, the bank initially said that it had decided to launch a GMTN programme to sell eurobonds/bills on international markets and a diversified payment rights (DPR) programme to obtain securitisation loans from foreign lenders.

“Insights gathered from our non-deal roadshow with fixed-income investors indicate strong interest in our planned upcoming issuances,” the bank noted in its August 25 filing with Borsa Istanbul.

The return of traditional Western counterparties is expected to drive down borrowing costs for the lender, which previously during the height of its legal exposure was forced to rely on higher-cost alternative financing channels and specialised bilateral facilities.

Happy ending

In March, Halkbank said that it signed a deferred prosecution agreement (DPA) in its favour with the US Attorney's Office for the Southern District of New York, a unit of the US Justice Department, in order to end the criminal case by means of a settlement.

The case was initiated in 2017. Criminal charges were brought against Halkbank in 2019 in the US as regards an alleged involvement in a scheme that evaded American sanctions on Iran between 2012 and 2016.

Halkbank has not admitted to any criminal wrongdoing and has not paid any judicial or administrative fines. The US Treasury Department's Office of Foreign Assets Control (OFAC) closed administrative processes that targeted Halkbank.

“This development is expected to positively impact our Bank's financial structure thanks to the expansion of our Bank's access to overseas resources, correspondent banking network and international markets,” Halkbank said.

“Our Bank will maintain its activities in compliance with all local and international regulations and in a robust, trustworthy and seamless manner in the future just like it has done so in the past,” it added.

On March 13, Halkbank said that the agreement with the US authorities had gone into effect.

In July, Reza Zarrab, a key figure in the alleged sanctions-evasion scheme, who turned state witness at a US court, received a “time served” sentence, meaning he faces no additional incarceration. It was handed down by New York judge Richard Berman after prosecutors credited Zarrab with providing essential help in the Halkbank case.