Representatives from G20 and OECD countries will meet in Istanbul on Friday to discuss how companies can avoid too much risk. The G20/OECD Corporate Governance Forum will consider sound corporate organization, safer financial markets, and well-regulated financial systems in emerging markets. The Forum will also address issues of systemic importance to sustainable private sector growth, including the institutionalisation of growth companies and capital market development in emerging market economies. Turkish Deputy Prime Minister Ali Babacan, a key figure responsible for the economy is scheduled to make the opening speech at the event.
Former central bank governor Durmu? Y?lmaz, who is running for Parliament in the June 7 general election on the Nationalist Movement Party (MHP) ticket, has criticized the Justice and Development Party (AK Party) government over its efforts to sink Bank Asya, claiming that the bank is strong and that it will be the nation that suffers most if the bank is destroyed. Y?lmaz said the public authority would have the duty of taking necessary action if Bank Asya had been involved in any wrongdoing; however, he said no clear or concrete mistakes, allegedly committed by the bank, have been revealed so far.
Turkey's Islamic banks are turning to Malaysia to cut costs as stubbornly high interest rates and slow trading hamper development of the domestic Turk?sh sukuk market. Kuveyt Türk Kat?l?m Bankas? A? plans to offer a five-year bond this week via private placement from a 2 billion ringgit ($539 million) sukuk program. Türkiye Finans Kat?l?m Bankas? A? was the first Turkish bank to sell the debt in Malaysia last year, issuing similar-maturity securities at a coupon of 6 percent. It paid 15.2 percent for a 2017 lira-denominated sukuk. Corporates from Indonesia and France are also coming to Malaysia to raise funds.
Turkish Islamic lender Bank Asya swung to a net loss of 877 million liras ($336 million) in 2014 on shrinking loans and deposits. The bank, in which Turkish banking regulators seized a small stake last week over an alleged illegal share sale, had reported a net profit of 180.6 million liras in 2013. Loan loss provisions amounted to 1.45 billion liras in 2014, almost half of which came in the final quarter, the bank said. Bank Asya wrote off 943 million worth of loans in 2014. Loans and deposits contracted 24 percent and 12 percent respectively in the fourth quarter.
Turkey's Capital Markets Board has approved issuance of ringgit-denominated Islamic bonds by Turkiye Finans Katilim Bankasi and a debut lira-denominated deal by Zorlu Energy. Islamic lender Turkiye Finans will raise up to 2.05 billion ringgit ($553.7 million) via sukuk, issued by its wholly-owned unit TF Varlik Kiralama. Separately, Zorlu Energy received approval to raise 100 million lira ($38.4 million) via sukuk. So far the bulk of sukuk issuance has come from the government and the country's four Islamic banks. Islamic lender Kuveyt Turk also plans to issue a debut sukuk in the Malaysian market, through a 2 billion ringgit programme.
Bank Asya’s lawyer Süleyman Ta?ba? vows to challenge the Finance Ministry's Financial Crimes wing (MASAK) and the banking regulator calling for return of shares. Acting upon information that the Finance Ministry's Financial Crimes Investigation Board (MASAK) was engaged in concocting a report that would cast negative light on publicly-traded Bank Asya, Süleyman Ta?ba? has filed a letter to MASAK stating that only the Banking Regulation and Supervision Agency (BDDK) and the Capital Markets Board (SPK) had authority. Adding that the incident constituted to an unconstitutional profiling of Bank Asya the lawyer vowed to defend the rights of the shareholders.
According to Standard & Poor's (S&P), the replacement of Bank Asya's management and upcoming general elections do not create risks for the banking industry. The international rating agencies' ratings for Turkey are not affected by the decision by the Banking Regulation and Supervision Agency's (BDDK) in regards to the seizure of Bank Asia. S&P futher noted that the bank's share in the banking system was only around 0.1 percent and therefore does not create any systematic risk for the banking sector. Moreover, Turkey's banking system is being positively affected by geopolitical developments with Turkish banks benefiting from what is happening in Russia and Ukraine.
Islamic lender Bank Asya has posted a net loss of 877 million lira ($335.58 million). The bank, in which Turkish banking regulators seized a small stake last week over an alleged illegal share sale, had posted a net profit of 180.6 million lira in 2013. Bank Asya has been battered by President Tayyip Erdogan's attempts to wipe out Gulen's religious movement, which he accuses of attempting to build a "parallel state". Regulators last month took over the bank's management after the government said it failed to meet some legal criteria.
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".
The Saving Deposit Insurance Fund (TMSF), which has seized Bank Asya, has determined the details of a precautions package. The bank will not be able to open new branches due to uncertainties in its liquidity structure. With the seizure by the TMSF, loan allocation and tracking processes and procedures will be improved. The new management assigned to the bank is striving first to preserve the current business and recover its customer portfolio. The information and documents submitted by the shareholders after the TMSF seized Bank Asya are currently being examined. Furthermore, criminal and judicial lawsuits will be filed against the previous management, which signed agreements that resulted in bad debt.
Turkey's third-largest state bank Vak?fbank has received regulatory approval Tuesday from the Banking Regulation and Supervision Agency to establish an Islamic banking division. Vak?fbank will be allowed to set up a stand-alone Islamic unit capitalized at $300 million. After the approval, the bank has nine months to establish its banking unit according to Turkish law. Shareholders of the new Islamic bank will include Turkish Directorate General of Foundations, Bayezid Han-? Sani (II. Bayezid) Vakf?, Mahmud Han-? Evvel bin Mustafa Han (I. Mahmud) Vakf?, Mahmud Han-? Sani bin Abdülhamid Han-? Evvel (II. Mahmut) Vakf? ve Murad Pa?a bin Abdusselam (Murat Pa?a) Foundation.
Turkey's Doga Group plans to enter the takaful market in the coming months with what would be the country's first such product. Its Doga Sigorta insurance unit is close to signing a cooperation deal with reassurance companies such as Swiss Re and others from the Gulf and Malaysia, the unit's Chairman Nihat Kirmizi said. Kirmizi said the Doga Group wanted to take advantage of the growing interest for Islamic finance products in the largely Muslim nation. The firm will be completely ready by May, and has received verbal permits from the Treasury. He added that at least three to four other firms planned to enter the takaful insurance market by 2018.
As uncertainties over the management of the Islamic lender Bank Asya continue, auditors from the Banking Regulation and Supervision Agency (BDDK) who are uneasy about a possible penalty that they may be subject to, have warned the agency, since the takeover decision was not made at a general assembly meeting of the bank. A news report in Bugün daily on Monday said the BDDK's auditors are worried about a possible fine for the takeover decision and had called on the agency's top officials to convene a Bank Asya general assembly meeting. The report further claims that the auditors expect a penalty of around TL 8-10 billion for the failure to gain a general assembly decision in the handing over of the management of the bank.
Kuwait's Warba Bank has successfully arranged a US$150 million, Sharia-complaint syndicated finance facility for the International Bank of Azerbaijan ("IBA"). The facility has a tenor of one year with a bullet repayment due at maturity. Warba Bank has participated in this transaction with a stake of US$20 million in a consortium of six regional and international banks: J.P Morgan Bank, Citigroup, Barwa Bank, Al Hilal Bank, Noor Bank and Dubai Islamic Bank. In addition, Warba Bank has also announced its contribution of US$15 million in an Islamic Sharia-complaint facility amounting US$80 million arranged by HSBC for the Turkish Ozun Group. Moreover, the Bank sold its real estate investment in West Bromwich in the United Kingdom achieving net profit of KD 640 K.
The Turkish Treasury said on Wednesday it issued a lira-denominated sukuk with a volume of 1.8 billion lira ($736 million). The instrument will mature on Feb. 15, 2017, the Treasury said on its website. With the latest sukuk, the Treasury's outstanding lira-denominated sukuk amount has increased to 6.8 billion lira. Treasury also has $3.75 billion worth of outstanding dollar-denominated sukuk.
In spite of the fact that more than 60 percent of Bank Asya's A-type shareholders have submitted the documents requested by the Banking Regulation and Supervision Agency (BDDK) that were the basis for recently taking control of the management of the bank, the watchdog agency has not given up that control, stoking claims that the management takeover was part of campaign of intimidation against the lender. Many believe that the government is not allowing the supposedly independent BDDK to give management control back to the partners. Even though the bank recorded a TL 875 million loss in 2014, its non-performing ratio is still one of the highest in the sector at about 18 percent.
Bank Asya has declared a commercial loss for corporate tax of TL 942 million ($383.44 million) and its "net term loss" for the fiscal period of Jan. 1 and Dec. 31, 2014 was TL 875 million. The bad debts of the bank had increased to TL 2.1 billion in the first nine months of 2014 and now the fourth quarter is being examined. Further, whether loans exceeding TL 3 billion, which were granted in violation of Articles 50 and 51 of the Turkish Banking Code, have been repaid or not will also be revealed after the examination of the 2014 balance sheet as publicly traded companies and banks have to hand in their balance sheets to the KAP. Besides, there are various allegations about the asset management companies to which the bank has transferred its bad debt files.
Turkey’s takeover of Bank Asya is making the government an even bigger player in the Islamic finance industry, just as state-owned lenders Ziraat Bank, Halkbank and Vakifbank prepare to start Shari’ah-compliant units to challenge the privately-owned banks. Vakifbank will get a $300 million loan from the Islamic Development Bank to help fund its Islamic finance arm, while Halkbank plans a capital raising to finance its unit. The initial idea as announced by officials was that the newly-established banks would not chase existing participation banks’ clients but instead focus on rural areas and increase the total pie. Finance Minister Mehmet Simsek said in an October interview he considered the Islamic finance industry in Turkey to be “under-banked” and that the government looked favourably on the idea of issuing new licenses to lenders.
The Turkish banking regulator's decision to take over the management of Bank Asya did not affect the country's unsolicited sovereign credit ratings, Standard & Poor's announced Feb. 6. Turkey's current credit rating stands at BB+ with a "negative" outlook. The rating agency sees this decision as an isolated incident and not a harbinger of systemic distress in the banking sector or a determined politicization of Turkey's regulatory institutions, S&P said in the statement. Bank Asya's relatively small size makes it rather unlikely that there could be any contagion effects, it added. Following the Bank Asya takeover, the United States had called on all governments to ensure the monitoring of corporate and financial activity is done in line with international legal standards.
Turkey’s government seized control of Islamic lender Bank Asya and dismissed its executives, marking the latest extraordinary step in a highly politicized monthslong battle over the company. Late on Tuesday, the country’s banking watchdog transferred 63% of Bank Asya’s preferred shares into the state-run Savings Deposit Insurance Fund, which answers directly to the prime minister. The fund then replaced the bank’s leadership with a new chief executive and board of directors. The bank’s shares, which have been allowed to trade only one houreach afternoon since September, dropped 1 kurus to 60 kurus (25 cents), a record low, and then rose to 63 kurus as Istanbul’s market closed.