June 3, 2015

Stock exchange says Bank Asya still belongs to shareholders

The main Turkish stock exchange, Borsa İstanbul (BİST), has said the shareholders of a recently seized Islamic lender still own the bank.

In a statement to the Public Disclosure Platform (KAP) on Tuesday, BİST said: “According to the information obtained from the Savings Deposit Insurance Fund (TMSF), the ownership of Bank Asya shares has not been transferred to the fund.”

“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 TMSF said.

The watchdog's May 30 announcement read: “…It has been decided as a result of inspections of Bank Asya that partnership rights -- excluding dividend payments -- along with management and supervision rights of the lender be handed over to TMSF with the purpose of partial or full transfer or sale or merger of the bank.” The bank's CEO Ahmet Beyaz confirmed on Wednesday that the shares have not been transferred to the state fund and that the shareholders will challenge the takeover decision. The legitimacy of a controversial crackdown on Turkey's largest Islamic lender became dubious after recent remarks made by the TMSF chair. In an interview with a national daily on Monday, the first business day after the seizure, TMSF Chairman Şakir Ercan Gül said: “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.”

Finance experts say it is possible to takeover a bank only if the lender loses all of its equity. Bank Asya currently holds TL 1.7 billion in equity.

Mehmet Tural, a former lawyer for the bankrupt Kentbank, said on Wednesday that the statements from BİST and TMSF head Gül confirmed that the intervention in Bank Asya was illegal and that the shareholders should call a general council meeting to decide the fate of the bank's ownership structure. Turkey was forced to pay a fine to Süzer Group for bankrupting Kentbank in the aftermath of a 2001 domestic finance crisis.

Erdoğan confirms Asya handover a political move

President Recep Tayyip Erdoğan said that the seizure of Islamic lender Bank Asya is the most important step in the struggle against the “parallel structure” while speaking on a live broadcast on Wednesday.

Erdoğan's statement contradicts an earlier comment by a senior government official. Deputy Prime Minister Ali Babacan said on Saturday that the takeover by regulators of Bank Asya was not political and that the Islamic lender would continue operating while sale or merger options were investigated. Babacan denied a political motive, saying the battle against the “parallel state” had been going on for more than a year. "If it were a political decision, these steps would have been taken ages ago," he said. Erdoğan on Tuesday negated these statements by Babacan.

“The Banking Regulation and Supervision Authority (BDDK) intervention in [Bank] Asya could be perceived to have resulted from a political agenda towards the bank and the events surrounding the bank could have a moderate negative impact on investor sentiment towards Turkey and the perceived independence of the BDDK,” Fitch said in a statement on Wednesday. Asya's license remains in place and it continues to operate fully, the Fitch statement added.

Erdoğan and his followers frequently use the term “parallel state” to refer to sympathizers of the US-based Islamic scholar Fethullah Gülen-inspired Hizmet movement. Bank Asya, which was founded by supporters of Hizmet, was seized by Turkey's banking watchdog last Friday and handed over to the Savings Deposit Insurance Fund (TMSF). The television presenter had said to Erdoğan: “It is said that the parallel structure is still active. How is the struggle against it going?”

The Bank Asya move came just days before the June 7 general election, and on the same day Erdoğan launched the Islamic lending operations of the state-owned Ziraat bank. The seizure also comes two weeks after the appointment of a new chief to the BDDK, a veteran Islamic banker who recently said Islamic lenders would bolster the financial industry in line with the “New Turkey” -- a term coined by Erdoğan.

Prior to the seizure of the bank, Erdoğan and the ruling Justice and Development Party (AK Party) government embarked upon a series of moves aimed at sinking the bank. As Erdoğan's war on the Gülen movement intensified, Bank Asya depositors, including state-owned firms and institutions, last year withdrew TL 4 billion ($1.7 billion), or some 20 percent of its deposits, reportedly under pressure from Erdoğan, who at one point last year declared that the bank had “already sunk.” 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 also canceled tax collection and social security payment contracts with Bank Asya in August.

The seizure of the bank has worried analysts and opposition party politicians alike, who are concerned that the increasing lack of respect for the rule of law will result in a decline in investor confidence. The country is in serious need of continued foreign investment, however government interventions in the private sector, usually aimed at businesses or institutions perceived as enemies, have already significantly spooked investors.

Published on Today's Zaman, 03 June 2015, Wednesday