May 16, 2015

Watchdog persistent in maintaining unlawful control over Islamic lender

Even though the pretext for the takeover of Bank Asya's shares has already vanished, the state-run Savings Deposit Insurance Fund (TMSF) balks at giving up its “temporary” management of the bank.

More than half of the A-type shares of Turkey's largest Islamic lender, Bank Asya, were placed under the control of the TMSF after the banking watchdog, the Banking Regulation and Supervision Agency (BDDK), issued a regulatory decision citing insufficient transparency to allow for proper regulation.

The interim board assigned by the TMSF is still in charge even though 92 percent of the A-type shareholders have, as of Friday, submitted the requested documents to the BDDK, thereby putting transparency concerns to rest. The TMSF's persistence in maintaining management control strengthens the shareholders' argument that the bank has been targeted solely for political purposes.

A-type shareholders have the right to nominate board members at an annual meeting.

The bank's lawyers have argued that the TMSF should have relinquished control of the bank as of April 10, by which 51 percent of shareholders had submitted the requested documents. Most recently, the shareholders lodged a complaint with the banking watchdog, accusing it of damaging their financial interests and vowing to take legal action seeking TL 94 million in compensation.

The shareholders of Bank Asya are known for their ties to the Gülen movement -- the faith-based community inspired by Turkish Islamic scholar Fethullah Gülen which has recently been targeted by high state officials -- and publicly supported by the country's largest opposition daily, Zaman.

International credit rating agencies and opposition figures had previously warned that what appeared to many as an attempt to sink Bank Asya over its links to the Gülen movement would be very harmful to the economy, noting that the Islamic lender has a strong deposit structure.

Published on Today's Zaman, 15 May 2015, Friday