Turkey’s deteriorating finances are hurting the country’s banks whose reliance on dollar funding makes them vulnerable to the worst-case scenario: a sudden halt or reversal of foreign investment flows. International investors are growing nervous about Turkey for a variety of reasons. But U.S. legal action against a number of Turkish individuals over alleged Iran sanctions busting – and the risk that some of the country’s banks might be sucked into the case – lies at the heart of the latest concerns. Since Turkey’s financial crisis in 2000, its banks have earned a reputation as being among the best-run in emerging markets, holding capital reserves far above those required by global rules. They are still borrowing funds on international markets for lending on to domestic clients, and executives say they do not expect any significant future difficulties. Nevertheless, borrowing costs are rising for the banks, which have accumulated dollar debt piles …