'Turkey may face serious financial crisis due to attacks on Bank Asya'

A former high-level financial official has warned, in light of claims that a number of Turkish banks are in difficulty, that a smear campaign orchestrated by President Recep Tayyip Erdoğan against Bank Asya could lead to a worse financial crisis than the one Turkey suffered back in 2001.

“The situation could get worse than it was in the financial crisis of 2001,” Doğan Cansızlar, former head of the Capital Markets Board (SPK), told the Bugün daily on Wednesday, noting social media claims that 10 Turkish banks are in dire straits.

“Such a situation would deal a big blow to the financial sector,” he added.

Speaking to reporters on a return flight from Qatar at the beginning of the week, Erdoğan publicly threatened independent regulatory body the Banking Regulation and Supervision Agency (BDDK) over its lack of action against Bank Asya, saying the agency must take a decision on the bank and follow through on it.

“You can't run a mill with a bucket of water,” Erdoğan said, claiming that if citizens cannot withdraw their money from a bank any time they want, there must be a problem with the bank's capital ratio. Erdoğan's comment was a reference to a public campaign in which thousands of people rushed to deposit money with the bank in reaction to the Erdoğan-led assault to bankrupt Bank Asya, Turkey's largest Islamic lender, due to its affiliation with the faith-based Hizmet movement.

“Nobody has the right to pave the way for the finance industry, which, having achieved its current position after much struggle and suffering, is now on solid foundations, to go through the same thing again,” the former SPK head explained.

The banking industry may be in worse shape than many think. On Tuesday Twitter user @fuatavni revealed the names of eight banks that he maintains are in financial difficulties.

The post by @fuatavni, a government whistleblower writing under a pseudonym, believed to be a member of Erdoğan's close inner circle, came after Bank Asya was targeted by President Erdoğan on Monday night.

Erdoğan's targeting of Bank Asya is a clear violation of the Banking Law, Article 74 of which describes any action or comment that might damage a bank's reputation as a crime. Violators of this article face a prison sentence of up to three years.

In remarks to journalists, Erdoğan warned the BDDK that it would be held “responsible” if it failed to act against Bank Asya. Erdoğan also said that no other bank was under BDDK surveillance.

Cansızlar is concerned that the whole country will be harmed by the attacks on Bank Asya, which he describes as a “very dangerous game.” “Everybody needs to act carefully. Banking and finance should not be used to settle accounts. A state or government cannot spread rumors to make a bank go bankrupt. In the absence of an [official] investigation, a judicial decision, such a situation will make everybody pay a price.”

@fuatavni gave the names of eight banks that are being closely monitored by the BDDK over the possibility of bankruptcy. The whistleblower also warned that he would reveal the names of two other banks that might go bankrupt if Erdoğan persists in his attack on Bank Asya.

Noting that everyone has vivid memories of how deeply the Turkish economy suffered during the financial crisis of 2001, former SPK head Cansızlar told the daily, “In no [other] country in the world will you see a state trying to make a bank go bankrupt or turning a blind eye to it being pushed into bankruptcy.”

According to Cansızlar, Erdoğan's targeting of Bank Asya might affect the level of foreign capital in Turkey, which makes up 54 percent of the financial sector, saying, “Foreign capital will be scared by this situation.”

Bank Asya hit back at Erdoğan's comments on Tuesday, saying the company's banking operations have continued to run smoothly, rejecting any alleged uncertainty about the bank's deposits, shareholders and board. Recalling that the bank has been facing a smear campaign for the last 10 months, in violation of the Banking Law, the statement sent to Borsa İstanbul (BİST) underlined that the bank has thoroughly met its commitments.

Cansızlar, who underlined that the BDDK and SPK should, as independent regulatory bodies, carry out an investigation and make a statement to calm the markets without delay, said, “A criminal complaint should be filed about those who have spread rumors.”

According to @fuatavni, 10 banks are under surveillance by the BDDK, and Erdoğan and leading government officials in charge of the economy have been informed of the matter.

The smear campaign's toll on Bank Asya shares traded on BİST became clear on Monday, when Turkey's stock exchange lifted the ban on trading Bank Asya shares that it had imposed on Aug. 7. Cansızlar suggested that small investors file complaints against the SPK and BDDK for the harm they have suffered due to these rumors.

Published on Today's Zaman, 17 September 2014, Wednesday