Bank Asya moves to save capital as president calls on watchdog to intervene

ISTANBUL/ANKARA

Bank Asya is caught in the firing line between the government and the Fethullah Gülen community. REUTERS Photo

The Turkish government has said the ball is in the court of the country’s banking watchdog, regarding Islamic lender Bank Asya’s efforts to recover its collapsed capital base.

“There are steps that should be taken by the Banking Regulation and Supervision Agency [BDDK],” President Recep Tayyip Erdoğan said on Sept. 15, speaking to reporters on his return plane back to Turkey from Qatar.

Bank Asya moved to raise it paid-capital to save it from financial constraints with which it has been wrangling for months.

The lender, whose founders are known to be sympathizers of U.S.-based Islamic scholar Fethullah Gülen, has faced several setbacks since it has found itself at the center of the struggle between former allies Gülen and the ruling Justice and Development Party (AKP).

In addition to failures of partnership with two potential buyers and cancellations of a number of public contracts, the bank most recently received a major blow at the stock exchange.

Shares of the lender have nosedived, falling by more than 35 percent over the past two days, as trading resumed after a suspension of more than a month due to uncertainty regarding its ownership.  
“Trading of Bank Asya’s shares has restarted, and [the bank] has entered the process of hitting the bottom,” President Erdoğan said Sept. 15.

He said the situation had worsened to a point where “citizens can’t withdraw their money,” adding that the BDDK is the agency responsible for intervening in Bank Asya’s situation.

“A reality should be seen here. You cannot carry out business without adequate means. The banking business has its own rules, and you have to play the game according to them,” he said.

“There are steps that need to be taken by the BDDK. I don’t know which article it will implement; but I need to follow this case for the unity and welfare of my country; we are on the trail,” Erdoğan added.

A few hours after the president’s statements were published, Bank Asya said its activities resumed uninterrupted and that it has fulfilled all demands of public authorities after 10 months of intense audits.

Vowing “to continue to fulfill all of its responsibilities to the customers,” the lender reiterated its harsh criticism of media reports of the situation, which it accuses of attacking the bank and its financial welfare.

In a second announcement made to the stock exchange filing, the lender announced it will raise its paid-in capital to over 1.1 billion liras ($508.4 million), from its current 900 million Turkish Liras.
The lender, which had closed off trading on Sept. 15 with a 20-percent decline, extended its losses yesterday to 35 percent, hitting a low of 0.89 liras.

The market value of the lender, which was 1.3 billion TL at the end of 2013, plummeted by around 40 percent to 801 million liras.

Prime Minister Ahmet Davutoğlu also supported Erdoğan’s call for the BDDK to step in, but he cautioned people to disregard “manipulative” and “deceptive” media reports regarding banks.

“If any bank, not excluding Bank Asya, is in a situation contrary to the provisions of law and the banking system, it is the duty of our state institutions, particularly the BDDK, to evaluate this,” Davutoğlu told reporters on Sept. 16.

Deputy Prime Minister Ali Babacan and Finance Minister Mehmet Şimşek also joined Erdoğan and Davutoğlu in pointing to the BDDK as the sole authority over the issue, avoiding further comment.