UPDATE 2-Turkey's watchdog seizes Bank Asya stake

Turkish banking regulators on Wednesday seized a small stake in the Islamic lender Bank Asya over an alleged illegal share sale. The banking watchdog said in a statement on Wednesday that Turkey's Savings Deposit Insurance Fund had seized preferred shares in Bank Asya held by a publishing company and a construction firm, citing irregularities in the sale of their parent company, Kaynak Holding, to a Dutch firm in January. The watchdog said that only preferred shares had been seized, but did not specify the size of that holding. The announcement came just hours after the ratings agency Standard & Poor's warned that actions against Bank Asya illustrated "the potential for political risk, or the perception of it, to directly or indirectly spill over into the financial system".