Turkey’s banking watchdog says Bank Asya shares partially seized

ANKARA/ISTANBUL

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Turkey’s banking watchdog (BDDK) said yesterday regulators have taken control of a small stake in embattled Islamic lender Bank Asya over what it described as an illegal share transaction.

The BDDK said Turkey’s Savings Deposit Insurance Fund (TMSF) seized shares held by publishing company Sürat Printing and construction firm Forum Construction because of several irregularities in the January sale of their parent company to a Dutch firm.

As of November last year, the two companies held a total of 6.55 percent of Bank Asya, according to the bank’s regulatory filings.

Meanwhile, the ratings agency Standard & Poor’s said yesterday incidents surrounding Turkey’s Bank Asya, which ended in its management takeover by regulators in early 2015, showed the potential for political risks to spill over into the financial system.

S&P also said a June parliamentary election should not pose a particular source of risk for Turkish banks.

“As for domestic political risks, we do not see the June 7 parliamentary elections as a particular source of risk for banks. However, the incidents in 2014 surrounding Bank Asya, which ended with the regulatory action against it in early 2015, illustrate the potential for political risks, or the perception of it, to directly or indirectly spillover into the financial system,” S&P said.

Turkey’s banking regulator seized control of Bank Asya due to transparency concerns, according to the banking watchdog. The Savings Deposit Insurance Fund (TMSF) seized 63 percent of Bank Asya shortly after the Banking Regulation and Supervision Agency (BDDK) ruled in favor of its seizure, in early February.

“On the external front, we expect monetary decisions by the Fed and the ECB to offset each other, minimizing their impact on the availability and pricing of foreign funding. Domestic monetary policy and falling oil prices will shape Turkish banks’ interest margins and might slow the ongoing margin squeeze,” the ratings company said.