June 3, 2015

Illegal intervention in Bank Asya collapses

Turhan Bozkurt

I have explained that a decision by Turkey's Banking Regulation and Supervision Agency (BDDK) on May 29 to hand Bank Asya over to the Savings Deposit Insurance Fund (TMSF) lacks financial and legal grounds and that it was made upon orders from President Recep Tayyip Erdoğan.

I said that those behind this politically-motivated decision would not be able to bear the consequences and this is how things have turned out. The controversial decision of the BDDK, which will go into the history of banking as “a legal fiasco,” collapsed in three days.

BDDK members that dared to attack the bank -- 55 percent of whose shares are open to public -- without even one reference to an audit certificate, were not only shaken by a confession from the TMSF head, Şakir Ercan Gül, who said: “The net assets of the bank are positive. We will not touch the shares of the founding partners and shareholders in the stock exchange,” but also by a statement from Borsa İstanbul (BİST) on Tuesday.

In a statement to the Public Disclosure Platform (KAP) in the evening hours of Tuesday, the BİST administration said, “According to information from the TMSF, ownership of the shares of Bank Asya has not been transferred to the TMSF and the legal situation concerning the ownership rights of the bank's shares is the same as before the publication of the BDDK's relevant decision in the Official Gazette on May 30.” Although the statement seems confusing, it means to say that the execution of the BDDK decision is not possible according to the Banking Law. This means the BDDK has hit a wall. The statements of both the TMSF head and BİST have two meanings. 1) The TMSF did not take over the shares of Bank Asya, but rather the TMSF only has control over the administration and audit of the bank. The TMSF's position in the bank is not very different than what it was before Feb. 3, when the fund took over most of the bank's management. 2) Bank Asya still belongs to its shareholders.

Let's remind the BDDK once again: The banks which were handed over to the TMSF in 2001 lost all their net assets. The capital owned by the banks' shareholders was zeroed. Since there was no capital in question, the TMSF took over the shares of the banks' shareholders. Yet, Bank Asya owns net assets of TL 1.7 billion. Its capital adequacy ratio is 18.3 percent, which is above the sector average. With such figures, it is impossible for the TMSF to take over the shares of Bank Asya.

Tough days are waiting for BDDK President Mehmet Ali Akben. He made a very controversial decision immediately after he was appointed as president of the BDDK. The fact that his decision cannot be executed shows how problematic it is. The TMSF cannot fully takeover the bank.

I am sure the shareholders' lawyers, who will petition the administrative courts this week for a stay of execution and cancellation of the BDDK's decision, will include the relevant statements of the TMSF and BİST in their petitions. These trials will be very exciting. Courts will reveal in the shortest time possible how BDDK's members, who disregard the law, have placed a bank, its shareholders and the economy into a difficult position. Nobody should have any doubts about this. Even the figures appointed by the BDDK are trying to find a way to legitimize the BDDK's decision because they fear the consequences.

The customers of Bank Asya should not stop standing behind their bank. They already know that their savings are safe in one Turkey's most secure banks. They may have been a little bit confused by the TMSF takeover but let me repeat it again -- Bank Asya's shares have not been transferred to the TMSF. The owners of the bank's shares are still its shareholders. There is a need for a little bit more patience. There is little time left before the finale of an 18-month political game.

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