April 30, 2015

Watchdog fails to explain continued Bank Asya intervention

A recent takeover of the control of shares in Turkey's largest Islamic lender Bank Asya was a temporary, preventive measure and “not meant to hurt the bank,” Turkey's Banking Regulation and Supervision Agency (BDDK) said on Thursday, failing to provide an adequate explanation for not returning control to the stockholders despite the agency's requirements having been met.

Earlier this year, the banking watchdog took over management control of the majority of the bank's privileged shares, citing the absence of some shareholder information in the agency's records. Bank Asya shareholders supplied the requested documentation and lodged a complaint with the banking watchdog, accusing it of damaging the financial interests of the bank's shareholders, and vowed to take legal action. The lender's shareholders subsequently filed a lawsuit against the BDDK seeking TL 94 million in compensation and a court in Ankara is hearing the case. In their defense argument on Tuesday, the BDDK said it had been warning Bank Asya since 2010 regarding alleged management risks. “The risks had grown to where they posed a structural problem for the bank by August,” the BDDK court defense statement said. However, the BDDK emphasized that the takeover of control of Bank Asya shares was a “temporary measure.”

The banking watchdog on Feb. 3 handed management control of 63 percent of Bank Asya's privileged shares over to the state savings fund, citing insufficient transparency to allow for proper regulation. Bank Asya's management and shareholders, however, denied the existence of flaws in the bank's transparency and said the decision was a government-orchestrated bid to sink the lender. Bank Asya announced on Tuesday that it had collected and sent the required information to the BDDK regarding 94 percent of all the shareholders despite it appearing to be an arbitrary request and being given an unreasonable deadline, and claimed that the pretext for continued control of the bank's shares has been eliminated.

Lawyer Süleyman Taşbaş, who represents the shareholders, told the Bugün daily on Tuesday that the bank is demanding an immediate return of control of the bank's shares. “The BDDK is prolonging the proceedings on purpose although the shares in Bank Asya rightfully deserved to be returned to the shareholders. … They [BDDK] had cited the lack of documents as the reason for the takeover of control of the shares; now all the requirements have been met and the bank is under an unlawful siege,” Taşbaş asserted.

International credit rating agencies and opposition figures earlier warned that what appeared to many as an attempt to sink Bank Asya due to its links to the Gülen movement -- a faith-based community inspired by Turkish Islamic scholar Fethullah Gülen which has being targeted by high state officials recently -- would be very harmful to the economy, noting that the Islamic lender has a strong deposit structure.

Published on Today's Zaman, 30 April 2015, Thursday