Capital markets watchdog rejects Bank Asya sukuk issuance

ISTANBUL

REUTERS Photo

Islamic lender Bank Asya has received another blow, as the Capital Markets Board (SPK) did not approve a 140 million-Turkish Lira sukuk issuance from the lender’s asset leasing subsidiary.

The lender’s share trading was suspended by the Borsa Istanbul stock exchange on Aug. 14 until “uncertainty regarding its ownership is resolved.”

The country’s capital markets watchdog cited the same concerns and announced it has decided not to accept the Bank Asya subsidiary Asya Varlık Kiralama’s (Asset Leasing) request to issue a 140 million lira sukuk, which commonly refers to the Islamic equivalent of bonds, for consideration.

The bank has seen its profits and capital base collapse since December 2013, when it found itself at the center of a power struggle between President-elect Recep Tayyip Erdoğan and his political foe Fethullah Gülen, an Islamic scholar based in the U.S. whose sympathizers founded the bank in 1996.

Doubts over the bank’s future and its shareholder structure have been growing due to contradictory statements from the government regarding its potential acquisition by the state-run Ziraat Bank, as well as the annulment of key contracts by several public agencies.