February 4, 2015

Harsh criticisms pour in as TMSF takes control of board at Bank Asya

Turkey's state-run Savings Deposit Insurance Fund (TMSF) has taken over management control of 63 percent of the privileged shares in Bank Asya, Turkey's biggest Islamic lender, as part of a government-orchestrated crackdown on institutions affiliated with the Gülen movement (Hizmet movement).

On Tuesday, the Banking Regulation and Supervision Agency (BDDK) ordered TMSF to take control of 63 percent of the bank's stocks and appointed a new board of directors. The banking watchdog claimed that the bank "violated the conditions that it should maintain transparent with an open partnership structure and organizational scheme."

Although some pro-government media outlets claimed that the BDDK's action was the seizure of the bank itself, it was not the case.

Bank Asya lawyer Ergün Özkan denied that the TMSF seized the Islamic lender, stressing that it only made changes in Bank Asya's management that will not affect the bank's operations. He said the TMSF operation was carried out due to claims that the bank failed to provide necessary documents regarding its partnership structure and organizational scheme, stressing that the bank, however, should have been given a notification asking to provide these documents.

The operation appears to be part of the government-orchestrated crackdown on institutions affiliated with the Gülen movement, and the BDDK decision drew harsh criticism from the public, with many saying that the operation aims to intimidate depositors and urge them to withdraw their money in order to put the bank into a financially difficult situation.

However, the bank's loyal customers and many others who wanted to stand by the institution gathered in front of the bank's headquarters while the police were in the building on Tuesday night. Thousands also flocked to Bank Asya offices early on Wednesday to deposit more money into their Bank Asya accounts in a show of solidarity.

Main opposition Republican People's Party (CHP) İstanbul deputy Mahmut Tanal announced on Wednesday that he would file a petition with Parliament's relevant bodies and ask officials to deposit his monthly salary in a Bank Asya account.

“This political operation, which is just a hijacking, eliminates legal protections,” Tanal tweeted on Wednesday.

Nationalist Movement Party (MHP) deputy Kemalettin Yılmaz called on other banks to stand against the “unlawful” operation as this “fire will also spread to them.” “Those who violate laws today will one day need these laws,” he said.

Journalist Gültekin Avcı, who is a former prosecutor, said the government's efforts to seize full control of Bank Asya is totally unlawful and will certainly be ruled against by the European Court of Human Rights (ECtHR) if local high courts fail to rule against these efforts.

Economists say that the operation targeting Bank Asya might negatively affect foreign investors in Turkey. Speaking to the Zaman daily, academic Elvan Aktaş from Valdosta State University in the US said that such a politically motivated operation against a private bank would not only affect that bank but also the whole country. According to Aktaş, such an operation can only be seen in dictatorships and third-world countries. "Even when a bank sinks under normal circumstances, this indicates that the state failed in its inspections. This operation does not only affect Bank Asya. It also means that an investment is being destroyed for political reasons. If you make a bank sink, financial balances are ruined. Those who invest with bank credit will have to pay much more interest. The ruling party supporters will also be affected negatively," Aktaş said.

Aktaş highlighted that this seizure on part of the bank's stock can only be temporary, because the bank cannot technically be seized unless depositors withdraw their money from Bank Asya.

Mehmet Altan, one of Turkey's leading economics professors, was highly critical of the Bank Asya operation. “The country where a bank is seized on the grounds that it did not provide authorities with documents on its organizational structure is called ‘New Turkey.' They ripped into the law, they ate it up, and now it is the economy's turn. This is shooting oneself in the foot,” he said.

The government has been waging a campaign to force Bank Asya out of business due to its ties with the Islamic scholar Fethullah Gülen-inspired Hizmet movement. Following severe corruption allegations against key government figures that surfaced on Dec. 17 and 25, 2013, the ruling Justice and Development Party (AK Party) convinced friendly firms as well as public institutions to withdraw deposits from the bank in order to damage its financial integrity. Throughout last year, the government took a variety of strikes at the lender, and at one point President Recep Tayyip Erdoğan claimed that the bank had “already sunk.”

Having one of the best capital adequacy rates in the sector, Bank Asya rejected such assertions. Turkey considers it a crime to defame a bank in a way that may shake its prestige or cause a loss of confidence in it.

Bank Asya, founded by Gülen sympathizers, saw depositors including state-owned firms and institutions withdraw funds last year in what it has described as a systematic campaign to undermine it.

Pro-government newspapers carried almost daily reports on Bank Asya's woes earlier last year, portraying it as a failing bank being propped up by members of the Gülen movement.

The government canceled tax collection and social security payment contracts with Bank Asya in August.

GYV condemns ‘intimidation operation' against Bank Asya

The Journalists and Writers Foundation's (GYV), of which Gülen is the honorary president, also strongly criticized the TMSF action.

“We condemn the intimidation operation of the government, which failed to sink Turkey's largest Islamic lender,” the GYV said in a statement released on Wednesday.

The GYV said the operation aims at intimidating depositors of the bank by creating the impression that the state seized the bank and urging them to withdraw their savings from the institution.

“We have full belief that Turkey will be a state of law one day and those involved in this unlawfulness and oppression targeting Bank Asya will be held accountable,” the statement said.

Published on Today's Zaman, 04 February 2015, Wednesday