The takeover of Bank Asya by the Turkish Savings Deposit Insurance Fund (TMSF) is entirely legal and judicial, but not political, Turkish Prime Minister Ahmet Davuto?lu said on late Feb. 4. Many people continued to show their support to the bank by putting money into their bank accounts Feb. 5, although some others were reported closing their bank accounts. TMSF seized some 63 percent of Bank Asya shortly after the banking watchdog (BDDK) ruled in favor of its seizure on late Feb. 3. The BDDK said in a statement on its website that it seized the bank “because the institution has not presented a partnership structure that is transparent and open enough to allow for effective regulation.” The watchdog appointed a new board of directors immediately after the seizure.
Turkey's largest Islamic lender, Bank Asya, is demanding that the state-run Savings Deposit Insurance Fund (TMSF) return the bank's rights to control its management following strong indications that the fund's decision to take over control of the lender's board has no legal basis and is politically motivated. Turkey's banking watchdog, the Banking Regulation and Supervision Agency (BDDK), handed management control of 63 percent of the privileged shares of Bank Asya over to state savings funds on Tuesday, citing a lack of certain key documents as the reason why the bank cannot maintain its operations. The bank's shareholders are currently preparing to provide the watchdog with the required documents and the bank has separately taken legal action to revoke Tuesday's intervention.
Turkish Economy Minister Nihat Zeybekci said on Wednesday a banking regulators' decision to take over management at Islamic lender Bank Asya ends a period of speculation and restores a safer environment. Zeybekci also told a news conference broadcast live on TRT television that it was "unfair" Turkey had to pay a high cost due to its interest rates and accused the central bank of lagging the market after the bank decided against holding an extraordinary policy meeting to cut rates.
The Saving Deposit Insurance Fund (TMSF) has seized the Gülenist bank, Bank Asya, and shares belonging to 122 real and judicial shareholders of the bank, including Kaynak Holding, Ortado?u Tekstil and Forum ?n?aat, have been transferred to the TMSF. Some of the shareholders that have been deprived of their shareholding rights are known to be financers of the Gülenist Movement, such as Naci Tosun (Kaynak Holding's affiliate Sürat Bas?m), Ali Akbulut (Ortado?u Tekstil) and Forum ?n?aat. Officials said that the decision was not a political one but mainly due to Bank Asya's negligence to meet the technical requirements.
A midnight police raid on the headquarters of Turkey's largest Islamic bank after a banking watchdog's decision to take over the bank's management on Tuesday lacks legal grounds and will likely stir further speculation in financial markets, pundits warned. The bank vowed to take legal action in response to Tuesday's decision. Economists highlighted on Wednesday that intervention in the bank's board can only be temporary, because the bank cannot technically be seized unless depositors withdraw their money from Bank Asya. Early on Wednesday, loyal Bank Asya clients flocked to branches across Turkey to shore up the Islamic lender with new deposits.
Turkey’s banking regulator took control of Bank Asya, stepping up a year-long campaign against the Islamic lender a day after self-exiled Muslim cleric Fethullah Gulen criticized the government from his base in the U.S. The Savings Deposit Insurance Fund, or TMSF, the agency responsible for resolving failed banks, appointed a new chief executive officer and board of directors late Tuesday, the bank said in a filing. Its activities will continue without “any disruption” under the new management. The government’s move against Bank Asya has been expected for quite some time now. The timing of the Bank Asya move intends to minimize the damage of the decline in investor confidence.
New Islamic units of three state banks will accelerate Turkey’s plans to expand the share of Shari'ah-compliant assets, said Osman Akyuz, head of the country’s Islamic banking association. Akyuz foresees the country’s interest-free assets increasing by 30 per cent to $60 billion in 2015, up from 1.2 per cent growth in the 12 months through November. The association, which represents Turkey’s four Islamic banks, is also working to introduce new debt instruments, Akyuz said. Besides, the three state banks -- Ziraat Bank, Vakif Bank and Halkbank -- have pledged to quickly set up units for Shari'ah-compliant banking.
While all of Bank Asya's partnership negotiations with foreign and local banks have failed within the past year, it has sold four of its subsidiaries and decided to increase its paid capital by 25 percent. Bank Asya first sold its 21.8 percent stake in Yeni Ma?azac?l?k A.?. (A101) worth TL 350 million ($152.2 million) on April 25, 2014, and then it sold its shares of Tuna GYO (Asya Termal) and Nil Yönetim Hizmetleri A.?. in July. Six months after these sales, Bank Asya is now selling its 40 percent share of Tamweel Africa Holding S.A. to the Islamic Corporation for the Development of the Private Sector (ICD). Therefore, the combined revenue earned is now TL 568 million when the last sale is included.
Turkey's Bank Asya said it was selling its 40 percent stake in Senegal-based Tamweel Africa Holding for 31.8 million euros ($37.7 million). Asya is selling the stake in Tamweel, which promotes Islamic finance in sub-Saharan Africa, to the Saudi-based Islamic Corporation for the Development of the Private Sector (ICD). The bank obtains 41.3 million lira profit through this sale and expects an positive impact on first quarter profitability, Cengiz Onder, Bank Asya's head of investor relations said. Besides, Bank Asya has laid off 1,708 staff and closed 80 branches, out of the 5,074 staff and 281 branches it had at the end of 2013.
TL 92 million ($396.46 million) has been collected from the financiers of the Gülen Movement for Bank Asya this week in order to fulfil the capital increase of Bank Asya. While some of the businessmen have previously refused any connection with the Gülen Movement, it became clear who their supporters were when the amount required for the capital increase of Bank Asya was collected without waiting for the approval of the Capital Market Board. Authorities from the Capital Market Board revealed that the bank's application for capital increase has not been confirmed yet. The board said the financial conditions of companies that will participate in the capital increase will also be investigated.
Turkey's Bank Asya has signed a deal to sell its 40 percent stake in Tamweel Africa Holding to the Islamic Corporation for the Development of the Private Sector (ICD) for 31.8 million euro ($37.7 million). Bank Asya suffered a run on deposits last year as it became embroiled in a power struggle between now President Tayyip Erdogan and his former ally-turned-foe Fethullah Gulen, the Islamic cleric whose sympathisers founded the bank.
Bank Asya is planning on closing its debts by the revenues it will gain from the scheduled paid capital increase. The bank plans to increase its capital by 25 percent, from TL 900 million to TL 1.1 billion through rights issues. Out of the TL 225 million to be gained from the paid capital increases, TL 200 million will be used for the repayment of its loans to foreign financial institutions. The remaining TL 25 million will be used to cover the demands for the funding of its corporate, commercial, SME and personal customers.
The board of directors of Turkey’s VakifBank’s has authorized a major loan procurement to set up an Islamic banking operation and confirmed that the bank’s general directorate office now has the authority to push ahead with the $300 million financing. The Turkish government wants to see the establishment of three Islamic banks as subsidiaries of the current state-run conventional banks by the end of 2015.
Turkish Islamic lender Turkiye Finans Katilim Bankasi has applied to issue 143 million lira ($60.5 million) via sukuk. The sukuk will be issued through TF Varlik Kiralama, a wholly-owned unit of Turkiye Finans, which has a focus on loans to corporate clients. No tenor or details of underlying assets were given for the deal. Separately, the bank has also received regulatory approval for a 71 million lira sukuk for trailer manufacturer Tirsan Treyler Sanayi ve Ticaret.
Takaful is set to grow in Turkey, with its predominantly Muslim population showing increasing interest in Islamic finance products and the government keen to support their growth. However, insurance of any kind can be a hard sell in Turkey, with the population generally averse to insurance cover and penetration levels as low as 1.4%. Consultancy firm Ernst & Young (E&Y) has identified Turkey as a new market for sharia-compliant insurance. E&Y suggests a number of hurdles have to be removed before such products could take off, with supply-side constraints and a limited legal infrastructure for Islamic finance currently hindering growth.
Takaful is set to grow in Turkey, with its predominantly Muslim population showing increasing interest in Islamic finance products and the government keen to support their growth. However, insurance of any kind can be a hard sell in Turkey, with the population generally averse to insurance cover and penetration levels as low as 1.4%. Takaful also has a minimal profile in the Turkish market at present. The two firms that offer Islamic insurance products, Neova Sigorta and Asya Emeklilik, account for less than 0.5% of the insurance sector’s assets. However, the increasing success of Islamic banks could point to a market opening for takaful underwriters.
The CEO of the International Islamic Trade Finance Corporation (ITFC), Dr. Waleed al-Wohaib, stated that the ITFC - an autonomous entity of the IDB - is planning to increase its annual trade financing volume in Turkey by $700 million within the next three years. The ITFC has been working with numerous banks in Turkey since its official opening in 2008 with current ITFC products trading in favor of Turkish corporations and bank amounting to approximately $1.65 billion. Meanwhile, Dubai-based Noor Bank is also reportedly eyeing off the Turkish finance market in an effort to escape the competitive banking climate of the emirates, CEO Hussain al-Qemzi said last week.
Islamic lender Kuveyt Turk has launched a $250 million dual-currency murabaha loan into general syndication. The sharia-compliant loan, which can be denominated in dollars or euros, is split into a one-year tranche and a two- tranche paying an interest margin of 80 basis points (bps) and 100 bps, respectively over three month Libor/Euribor. Arab Banking Corporation, Abu Dhabi Commercial Bank, Barwa Bank, Emirates NBD, Noor Bank and Qatar Islamic Bank are mandated lead arrangers and bookrunners on the deal. The loan will be used for general corporate purposes and is due to close by the end of the year.
Bank Asya’s problems – withdrawal of deposits by individual and corporate investors, the wiping out of profits, the dramatic fall in share price – have apparently nothing to do with the way the bank is run. They have everything to do with a politically-motivated vendetta against the bank by Turkey’s president, Recep Tayyip Erdogan. A year on, Bank Asya continues to operate under the leadership of a former senior member of Turkey’s respected banking supervisor, the BDDK, which has tried to remain impartial to Erdogan’s machinations. But the battle for Bank Asya remains a cloud over the Turkish banking sector. Banks that do business in Turkey should tread with caution.
Turkey is going to establish an organized industrial zone in the Palestinian city of Jenin in the West Bank, according to a memorandum of understanding co-signed on Wednesday. The memorandum was signed by Turkey's Science, Industry and Technology Minister Fikri Isik, and Palestine's Deputy Prime Minister and National Economy Minister, Mohammed Mostafa. Investors will not pay any taxes. The goods produced in the zone will be able to be exported to world markets including Germany, France, Saudi Arabia and the US without any duties or quotas. Moreover, the businesses will be insured by the World Bank. The goal is to bring the legal framework and corporate capacity in Palestine to international standards.