Questions over Bank Asya’s future mount amid row of gov’t officials

ISTANBUL

The pressure on Islamic lender Bank Asya is growing as it has pit two senior government figures against each other amid a whirlwind day that saw the annulment of deals  with two state institutions and suspension of its shares’ trading at the stock exchange.

The lender, whose owners are known to have close ties with Islamic scholar Fethullah Gülen, has been under scrutiny after contradicting statements from Deputy Prime Minister Ali Babacan and Prime Minister Recep Tayyip Erdoğan’s economic adviser Yiğit Bulut regarding the possibility of its acquisition by state-owned lender Ziraat.

In the late hours of Aug. 6, Bulut said Ziraat Bank has no plans to buy Bank Asya that Erdoğan knows of, belying Babacan, who confirmed the talks earlier the same day.

“There is no will, attempt or questioning regarding the acquisition of Bank Asya by the state within our dear prime minister’s knowledge,” Bulut said.

Just hours before Bulut’s denial of the sale negotiations, Babacan, the top government figure in charge of economy, had said Ziraat Bank is interested in buying Bank Asya as part of the government’s plans to enter the Islamic finance sector.

When asked about Bulut’s remarks yesterday, Babacan defended his announcement, but avoided engaging in a battle of words with Bulut, making no reference to him.

Cancelation of contracts

Amid the political figures’ ongoing row, the lender received another blow when the Revenue Administration and state social security institution announced ending service deals with the lender.

Turkey’s state social security institution said it has ended its services accord, hours after Turkish authorities cancelled a tax collection deal with it.

Both administrations said the annulments will come into force as of Sept. 8 and the lender is allowed to resume operations until that date.

In a statement released in response to the administration’s announcement, Bank Asya downplayed the impact of the annulment, but vowed “to use its legal rights against the decision.” 

The lender said no reason has been disclosed regarding the reasons of termination.

Following the Revenue Administration’s announcement, Turkish stock exchange Borsa Istanbul temporarily stopped trading Bank Asya’s shares before the start of the afternoon session.

The shares were traded at 5.3 percent lower when the Borsa Istanbul stopped the trading. The stock exchange management did not disclose when it will resume operations.

In his remarks on Aug. 6, Bulut claimed Babacan’s words were used by some circles to increase Bank Asya’s value, as the lender’s shares closed Aug. 6 with an 8.26 percent premium at 1.31 Turkish Liras after Babacan’s remarks. 

The contradiction between the two senior economy figures pushed Bank Asya shares lower in yesterday’s opening. The Islamic lender’s shares began the trading day more than 6 percent down, quickly tumbling to as low as 1.22 liras.

“The dear minister’s words were speculated and a speculation erupted afterward. Bank Asya’s value rose by 10 percent, or 100 million in terms of the lira,” he claimed. 

He continued with calling Turkey’s Capital Markets Board (SPK) to duty. “The ones that speculated and put a premium on Bank Asya should be subject to the SPK’s audit. The SPK should control who bought these shares yesterday, who buys them today and who sells these shares today,” he said.

Bank Asya’s founders include Gülen sympathizers, a former ally of Erdoğan who has become his bitter rival. State-owned companies and institutional depositors loyal to Erdoğan withdrew 4 billion liras ($1.8 billion), some 20 percent of the bank’s total deposits, according to Turkish media reports earlier this year.