Intensified attacks led by President Recep Tayyip Erdoğan and his associates against Turkey's largest Islamic lender, Bank Asya, have produced another series of reactions in Turkey, with the main opposition warning Prime Minister's Ahmet Davutoğlu's government about the dire consequences of targeting the bank.
“You are responsible for a new crisis that might be sparked in the banking industry,” main opposition Republican Peoples' Party (CHP) leader Kemal Kılıçdaroğlu wrote to Davutoğlu, lambasting him for being silent in the face of Erdoğan's clear attacks on the bank. Drawing attention to the prime minister's responsibility to protect banks, Kılıçdaroğlu said, “Nobody has the right to reward or punish a bank because of its shareholders, credit customers or accounts.”
The CHP leader emphasized that arbitrariness in how banks are treated resembles a “hand grenade with its pin pulled out, ready to explode at the center of financial system.” He added, “There will be no winners or losers of this game."
The government's pressure on the bank started in December of last year, when a witch hunt was launched by then-Prime Minister Erdoğan against the faith-based Hizmet movement to divert attention from two corruption investigations implicating him, his family members and government ministers.
Although Erdoğan has claimed that the Hizmet movement is a proxy of unnamed foreign plotters who plan to remove him from power with the corruption allegations, he has failed to submit any evidence supporting his allegations.
Taking its cue from the political authority, government-controlled media outlets have been running fabricated stories to discredit the bank in violation of strict banking and financial laws that protect the reputation of banks.
Bank Asya has been caught in the middle because some of its shareholders are affiliated with Hizmet.
Speaking to reporters during a flight from Qatar to Turkey on Tuesday, Erdoğan explicitly threatened the independent regulatory body, the Banking Regulation and Supervision Agency (BDDK), for not taking action against Bank Asya. He said the agency must make a decision on the bank and follow through on it. “You can't make a flour mill run with water you carry in a bucket,” he said, claiming that if citizens cannot withdraw their money from a bank any time they want, there is a problem with the bank's capital adequacy ratio. Erdoğan was ridiculing a public campaign in which thousands of people rushed to deposit money into the bank to aid its struggle for survival after the assault he led with the intention of sinking Bank Asya due to its affiliation with the faith-based Hizmet movement.
Kılıçdaroğlu recalled that a similar smear campaign against the banking industry in the past cost Turkey a lot, leading to the collapse of 25 banks and resulting in a loss of one-third of the national income. “If you are the prime minister, please do what is required of you,” he said, asking Davutoğlu to warn the president against scaring national and international investors.
CHP parliamentary group deputy chairman Akif Hamzaçebi told reporters on Wednesday that Erdoğan's remarks about Bank Asya are crimes according to the banking law. “The impact of a statement targeting one bank will not be limited to that bank only. It will have a chain-reaction effect. Erdoğan's remarks amount to irresponsible statements that will drag the banking system into a crisis,” he said.
Erkan Akçay, deputy from the Nationalist Movement Party (MHP) and a member of the parliamentary Planning and Budget Commission, also lashed out at Erdoğan, saying the president is sticking a dagger into the back of the Turkish economy by trying to sink a national bank. “President Erdoğan is openly giving an order to shut down Bank Asya and with this order, he is sticking a dagger into back of the economy”, he said, stressing that the president had openly threatened the bank by naming it and leveled slanderous accusations that the bank had “bottomed out.”
He warned that a crisis in the banking industry would unsettle the whole economy.
Erdal Sağlam, an economist, said Bank Asya has complied with all the orders from the regulators and in fact has done more than that by strengthening its position. He said the BDDK is under pressure from Erdoğan to seize the bank, but that regulators are reluctant to move as they are worried about criminal lawsuits in the future. “Just because the government asked for it [the seizure of the bank], it is very difficult for BDDK members to make such a decision,” he wrote in the Hürriyet daily, because of possible legal consequences. The law holds that each regulator at the BDDK is responsible for their decisions.
He said the matter has turned into something bigger than Bank Asya because the banking industry and foreign investors have started to feel negative repercussions from the debate, prompting concerns over economic stability in Turkey.
Ahmet Rüştü Çelebi, one of the founders of Faisal Finans Islamic Bank in 1985 and one of the founding members of the pro-government Birlik Foundation, has also criticized the smear campaign against Bank Asya. He said trying to force the bank into bankruptcy is tantamount to sheer oppression, adding other cases as such have occurred in world history.
“How is it possible that a state wants to sink its own national bank?” he asked. Çelebi also underlined that Erdoğan has committed a crime by openly targeting the bank.
CEO says Bank Asya one of three strongest among 51 banks
The chief executive of Turkish Islamic lender Bank Asya has said the bank is one of the three strongest banks in Turkey, with its capital adequacy ratio at about 20 percent, dismissing a 10-month-long smear campaign targeting the bank by President Recep Tayyip Erdoğan and his associates.
Speaking to the Samanyolu News station on Tuesday night, Bank Asya CEO Ahmet Beyaz said: “The average ratio of all banks is around 14 to 15 percent. Bank Asya's capital adequacy ratio is about 20 percent.” He added that the regulators determined a threshold of 12 percent for the capital adequacy requirement for all banks in Turkey.
On Tuesday the board of directors of Bank Asya raised its total capital by TL 225 million in cash to TL 1.12 billion to help further boost its capital adequacy ratio.
Beyaz said both the bank and its shareholders have filed some 300 lawsuits against media outlets for libel as well as for criminal prosecution, seeking justice in court. On Wednesday, the bank filed criminal complaint against those who have been conducting the smear campaign to discredit the bank.
An attorney for Bank Asya filed a criminal complaint with the prosecutor's office for what he called “an organized and systematic defamation campaign targeting the Islamic lender.” Ergün Özkan, the attorney for the bank's partners, asked the prosecutor to investigate a series of pro-government media outlets, including Sabah, Star, Yeni Şafak, Akşam, Takvim, Yeni Akit, ATV and A Haber for criminal offenses as listed in the Turkish Penal Code (TCK).
The complaint states that these media outlets have committed crimes in violation of laws regulating capital markets, banking, trade and financial industries. The charges envisage prison sentences from 7 to 14 years. The owners and editors of the media outlets were cited as suspects in the complaint.
Beyaz also criticized Interior Minister Efkan Ala without directly naming him by saying Ala had made a false claim to discredit the bank in complete disregard of its reputation.
Ala claimed that before the corruption scandal was exposed on Dec. 17, the bank had made $2 billion in profit after buying a large amount of US dollars when the greenback surged against the lira, which is exactly the same figure pro-government dailies cited Bank Asya to have allegedly made. He also said he had proof to support his claim.
All these allegations were refuted by the bank, which has published its currency transactions. The central bank has confirmed that the bank was not involved in any wrongdoing. However, Ala, who has failed to produce any evidence to support his claim, has declined to offer an apology to the bank.
It turned out the numbers did not add up to support Ala's claim. According to Yavuz Semerci, an economist writing for the Gazeteport online news portal, Bank Asya needed to purchase $30-35 billion of foreign exchange currency in order to make $2 billion in profit. He said the bank's asset size at the time was TL 23 billion ($11.5 billion), that TL 16 billion ($8 billion) of this was utilized as loans to companies and that profit disbursement amounted to TL 17 billion ($ 8.5 billion). “Where did they find $35 billion to buy such a huge amount of foreign exchange [currency] from markets?” he asked, stressing that the claim was a lie.
Faced with a systematic defamation campaign against his bank, Bank Asya's CEO said the bank had asked officials -- including the Banking Regulation and Supervision Agency (BDDK), a watchdog agency -- to stop this campaign. Beyaz said the smear campaign is in open violation of Article 74 of the Banking Law, in that the BDDK has tolerated false news stories about Bank Asya based on hearsay or on an official who spoke on condition of anonymity. It is punishable with up to three years in prison, and that sentence cannot be commuted.
The Bank Asya CEO said the bank is 13th-largest among 51 banks in Turkey, noting that it has more than 1 million account holders. “We contributed more than $30 billion to the Turkish economy last year,” he underlined.
Beyaz also explained that all of the bank's operations are transparent and regularly screened by the BDDK and other authorities. The bank, which has been in business for 18 years, is a publicly traded company and publishes its reports at regular intervals. “Since Dec. 17, we have undergone more rigorous auditing, and currently we have 30 government inspectors continually checking our books,” he noted.
Stressing that some 1,000 stories have been published as part of the smear campaign against the bank, Beyaz said any blow to the bank means a blow to the economy. He said the bank's monthly contribution to the economy is about $2.5 billion. Stressing that 54 percent of the bank's shares traded on Borsa İstanbul (BİST) are publicly traded, Beyaz stated, “Half of these shares are held by foreign investors.”
He warned that injustice and wrongdoing against the bank is hurting foreign investors' confidence. All foreign investors say they are stunned by the campaign targeting Bank Asya, he added.
The Bank Asya CEO pointed out that instead of triggering a run on the bank, a public campaign in which thousands of people rushed to deposit money with the bank to aid its struggle for survival has emerged, to the surprise of many. “Everybody realizes that what has been done to Bank Asya is unjust,” he emphasized.
The Erdoğan-led assault intended to sink Turkey's largest Islamic lender due to its affiliation with the Hizmet movement has also created cracks between the president and the government of Prime Minister Ahmet Davutoğlu. Concerned that the smear campaign may negatively affect the nation's financial and banking industry, Davutoğlu has said the speculation about the bank is ill-intentioned. He also said the rules and regulations in the banking industry are very clear and that the banking system in Turkey can withstand any crisis.
He underlined that those who comply with the rules have nothing to fear because Turkey is a country that respects the rule of law.
Deputy Prime Minister Ali Babacan, who is Turkey's economy czar, has asked citizens to not pay any attention to statements other than those issued by regulators or authorities.
Published on Today's Zaman, 17 September 2014, Wednesday