June 5, 2015

State fund affirms seized lender still belongs to shareholders

Not a week after stock exchange Borsa İstanbul (BİST) confirmed that shareholders of recently seized Bank Asya still own the bank, the state-run Savings Deposit Insurance Fund (TMSF) followed suit and said the ownership of Bank Asya shares belongs to its shareholders.

In a press release on Thursday night, the TMSF said: “… this situation means that the ownership of the shares remains belonging to the shareholders and also that all rights and powers excluding dividends [income] would be used by TMSF.”

Last week, BİST said in a statement to the Public Disclosure Platform (KAP): “… The legal status with regard to the right of property, with respect to individual shares, remains the same as it was before an announcement published in the Official Gazette by the Banking Regulation and Supervision Agency [BDDK] on May 30, 2015.”

The crackdown on Bank Asya came on May 29, just days before the June 7 general election and thus it sparked concerns over political interests behind the move. Prior to the seizure of the bank, President Recep Tayyip Erdoğan and the ruling Justice and Development Party (AK Party) government embarked on a series of moves aimed at sinking the bank.

The TMSF's Thursday statement said the seizure decision was made upon the “B” clause of the 71st article of the Banking Law, underlining that abuse of any of the five clauses of the same article requires such a decision.

However, within the 71st article of the law, there is no regulation requiring the BDDK to hand over the ownership of bank shares to the TMSF, the statement noted.

The B clause of the article reads that one of the conditions for the BDDK to act is the following:” If it turns out that operating [the bank] poses a danger with regards to the interests of deposit holders or shareholders and the stability along with security of the financial system…”

Yet, the articles prior to the 71st one require several sanctions before seizure.

Bank Asya is also known for its strong capital adequacy ratio, which is high above the sector average. Also the equity capital ratio of the bank is high. Even TMSF Chairman Şakir Ercan Gül said last week: “The bank's equity capital ratio is strong. We will not touch the shares of the founding partners and shareholders on the stock exchange. The bank has been handed over to the TMSF just to resolve its problems.”

Bank Asya currently holds TL 1.7 billion in equity.

Founded by the sympathizers of the faith-based Hizmet or Gülen Movement -- inspired by Turkish Islamic scholar Fethullah Gülen -- in 1996, the lender has long been in the news for its exposure to an intimidation campaign led by high-ranking state officials as well as pro-government media outlets and businessmen.

The government accuses Hizmet supporters of organizing “a coup attempt,” referencing investigations into corruption and bribery that implicated several Cabinet ministers, Erdoğan's sons and pro-government businesspeople. The major graft investigations were made public on Dec. 17 and 25, 2013.

Published on Today's Zaman, 5 June 2015, Friday