February 9, 2015

‘Efforts to sink a bank tantamount to treason’

As reactions to last week's legally flawed intervention in Bank Asya continue to pour in, outspoken critics of the intervention leveled harsh criticisms against the government on Monday.

A government-orchestrated plan currently under way to force Turkey's largest Islamic bank to fail and to hand it over to the state is a crime tantamount to treason, an opposition party leader said on Monday. Liberal Democrat Party (LDP) leader Cem Toker told Today's Zaman that any attempt to force the bankruptcy of any bank by any group or government is tantamount to treason and that those who commit such a crime must be punished accordingly.

Turkey's banking watchdog, the Banking Regulation and Supervision Agency (BDDK), handed management control of 63 percent of the privileged shares of Bank Asya over to the State Deposit Insurance Fund (TMSF) on Tuesday, citing a lack of certain key documents. Bank Asya denied these claims, arguing it was not given enough time to file the required documents. “This is no different than terrorists setting production facilities on fire in southeast Anatolia. …this is what the outlawed PKK [Kurdistan Workers' Party] would do had they been given the opportunity,” Toker said in reference to last week's politically motivated intervention in Bank Asya's board.

Toker said it is hard to explain why the government is trying to push for the collapse of a Turkish bank, stressing that the country has to maintain foreign investor confidence and attract even more hot money. “The latest attack on Bank Asya has shown that one is safe no longer in Turkey. We have to make sure the rule of law is restored,” Toker added.

Toker's criticism of the government was accompanied by an equally harsh reaction from the main opposition Republican People's Party (CHP) on Monday. Faik Öztrak, deputy chairman of the party, said in an interview with the Bugün daily on Monday that the intervention in Bank Asya is a crime and that the Islamic lender is financially healthy. Asserting that the government's aim is to sink the bank, Öztrak said: “All that was done [to the bank] is a crime. … The bureaucrats who signed this decision [of the BDDK] have, with all due respect, committed a crime, and will eventually face serious penalties.” Bank Asya is one of the three strongest banks in Turkey, with a capital adequacy ratio at about 20 percent. The average ratio of banks in Turkey is around 14-15 percent. President Recep Tayyip Erdoğan recently claimed publicly that the bank had gone bankrupt, although it is a violation of the law to make such a claim about a financial institution.

Private investments fell 6 percent compared to 2011

The government's growing authoritarianism, exemplified by the recent legally flawed takeover of the management of Bank Asya, has hit investors' confidence in the Turkish economy, with private investments having decreased by 6 percent compared to the figure in 2011, Öztrak said.

“Private sector investments in the Turkish economy are [currently] 6 percent lower than the figure for 2011 based on real prices,” the CHP deputy added. For Öztrak, who previously served as director of the Treasury in the early 2000s, the Turkish economy is in a very risky situation. Noting that investors have become much pickier as the amount of dollars in circulation has significantly decreased since 2013, Öztrak reportedly underlined that investors now look for safe markets where the rule of law prevails. “With this government in power, it is obvious that confidence in the [Turkish] economy has fallen,” Öztrak, who served previously as the CHP's deputy chairman in charge of the economy, was quoted to have said.

Öztrak, who visited several southern provinces in the past week, reportedly said not only are businesspeople anxious about the downturn in the economy, so is the man on the street. Market speculation that the Turkish lira could lose substantial value due to unorthodox monetary policy implemented under intense political pressure may now become a reality, as the Turkish president and government still push the central bank for an early rate cut. As a result, the Turkish currency has lost almost 8 percent of its value against the dollar since Jan. 16. The devaluation of the lira relative to the dollar has hit a high of 16 percent over the past six months amid domestic and external risks to the stability of the currency.

Drawing attention to the depreciation of the Turkish lira against the dollar, Öztrak told the daily: “Turkey is only second to South Africa as a country whose currency fell in value the most in 2014.”

“This indicates how fragile the Turkish economy is,” Öztrak added, arguing that Turkey must get rid of the current economic model, which is based on the inflow of huge amounts of hot money into the economy. Macroeconomic balances have also seriously deteriorated since the ruling Justice and Development Party (AK Party) came to power at the end of 2002, the CHP deputy chairman said. “The wealth of the richest 1 percent of the population corresponded back in early 2000s to 38 percent of the total wealth [in Turkey], while the figure has now increased to 55 percent,” Öztrak said.

It is of huge importance to have a relatively balanced distribution of wealth for the economy to grow faster, Öztrak told the daily.

Published on Today's Zaman, 09 February 2015, Monday