IslamicFinance.de

Bank Asya closed 80 branches and cut its headcount by 1,708 people in a bid to boost profitability next year. Bank Asya has seen its profits and capital base collapse since it found itself at the centre of a power struggle between now President Tayyip Erdogan and his former ally-turned-foe Fethullah Gulen, the Islamic cleric whose sympathisers founded the bank. The bank made a 301 million lira ($133 million) net loss in the first nine months of this year after a 60 million lira profit a year earlier, while its balance sheet has shrunk.

From 2008 to 2013, Bank Asya's assets and net revenue grew annually at 28 percent and 12 percent, respectively. Its reputation and business were soaring when, in December 2013 and without prior warning, President Erdo?an launched a powerful and concentrated attack on the bank, alleging that it was weak and insolvent. Despite losing almost half its market value during one excruciating week in September 2014 and reporting its first ever quarterly loss in 18 years of TL 301 million, Bank Asya has responded by highlighting its capital adequacy ratio of 18.3 percent. Ultimately, the solution to Bank Asya's current predicament ideally lies with President Erdo?an withdrawing his unfounded allegations.

Bank Asya's net loss in the third quarter was due to higher loan provisions as it sought to increase its asset quality, and the Islamic lender's operations are continuing "healthily," the Turkish bank said in a statement on Tuesday. Bank Asya fell to a 301 million lira ($133 million) net loss in the third quarter from a 60 million lira profit a year earlier as its assets declined sharply, it said earlier in a stock exchange filing. The bank said its capital adequacy ratio stood at 18.32 percent.

Turkey's Bank Asya on Tuesday posted a third-quarter net loss on loan provisions and a shrinking balance sheet but said its operations were healthy despite political turmoil that has surrounded it for much of the year. The Islamic lender fell to a 301 million lira ($133 million) net loss from a 60 million lira profit a year earlier. Assets of 16.5 billion lira at the end of the third quarter were down 40 percent from the end of 2013, while deposits almost halved to 10.07 billion over the same period. The bank continued its operations with a capital adequacy ratio of 18.32 percent, despite a 9-month loss due to higher loan provisions as part of efforts to increase asset quality, Chief Executive Ahmet Beyaz said.

Ahmet Beyaz, the chief executive of Turkey’s government-besieged Bank Asya, says his bank is the victim of a political campaign waged by Turkey’s powerful president Recep Tayyip Erdogan. Beyaz and his executive vice-president Feyzullah Egriboyun claim the repeated attacks on the bank clearly constitute a crime under Turkey’s strict banking legislation. The Turkish president has denied any orchestrated campaign against Bank Asya. He went on to say "this bank has already failed", without naming Bank Asya. Such claims are wrong, Beyaz says, insisting Bank Asya is among the three strongest banks in Turkey, boasting a capital adequacy ratio at about 20%. Bank Asya supporters argue that the Erdogan attacks on Bank Asya pose a systemic risk to the wider Turkish banking system.

Speculation publicly expressed by President Recep Tayyip Erdo?an that Bank Asya doesn't have a sound structure and his obvious attempts to sink this bank constitute a crime under Turkish law, according to Selin Sayek Böke, the Republican People's Party (CHP) deputy chair in charge of the economy. Sharing her opinions about the current economic situation in Turkey, Böke stated that Turkey has further potential for growth, but its economy is currently in stagnation. She attributes this situation to structural problems. The current decline in the practice of democracy and the erosion of the rule of law will likely cause further trouble ahead, as investors are already unwilling to make big investments in a country with an increasingly authoritarian government and leaders.

Islamic International Rating Agency (IIRA) has lowered the foreign currency international scale and local currency credit rating of Bank Asya to respectively B+ and BB- (previously BB+ and BBB-), in response to the weakened financial profile of the institution. IIRA has also revised the bank's national scale rating to BB+ from A. IIRA said the bank's opportunities to raise fresh capital and to reach liquidity in the market have decreased. It can no longer endure this situation. The credit rating agency Moody's also adjusted the ratings of the bank downward in a statement released in the last week of August.

Turkey’s stock exchange prolonged a freeze on Asya Katilim Bankasi AS’s shares, a day after it twice suspended trading in the Islamic lender. Bank Asya swung between losses and gains of as much as 11% before Borsa Istanbul called the halt because of “abnormal” buy and sell orders on Thursday. The shares had resumed trading on 15 September after a five-week suspension. The bank fell 48% in the three days through 17 September. Meanwhile, the president this week called for Turkey’s banking regulator to take action on Bank Asya, citing deteriorating finances. On the other hand, Bank Asya issued a statement earlier this week saying that it was facing an “economic lynching campaign” and continued to carry out its responsibilities to depositors and shareholders.

Turkey’s stock exchange halted trading in Asya Katilim Bankasi AS (ASYAB) twice today, deepening concern about the Islamic lender that has lost almost half of its market value this week. Istanbul-based Bank Asya swung between losses and gains of as much as 11 percent before Borsa Istanbul halted trading, saying “abnormal” buy and sell orders warranted the decision. The stock resumed trading on Sept. 15 following a five-week suspension imposed on the heels of a failed takeover bid by Qatar Islamic Bank SAQ and amid speculation the government will seize the lender. It fell 48 percent in the three days through yesterday. The lender is “just trying to stay afloat,” Erdogan said today.

A feud between Turkish President Recep Tayyip Erdogan and U.S.-based Islamic cleric Fethullah Gulen has made sukuk from Asya Katilim Bankasi AS (ASYAB) the worst-performing in the world. Debt from the Shariah-compliant lender known as Bank Asya has lost 29 percent this year, compared with an average 4.5 percent return for dollar-denominated sukuk globally. The government must be clear about what the “problem” with Bank Asya is and decide whether it will take over the lender or impose restrictions on it. The bank, whose shares resumed trading on Turkey’s bourse on Sept. 15 following the five-week long suspension, is planning to raise funds in a capital increase, it said yesterday. The stock slumped 42 percent this week to a record low of 72 kurus at 12:24 p.m. in Istanbul.

Shares in Bank Asya plummeted by nearly 20 per cent on Tuesday, reaching a new low, after Turkey's president Recep Tayyip Erdogan urged the country's banking watchdog to “make a decision” on the beleaguered Islamic lender's future.

Turkey's stock exchange on Monday lifted the ban on trading Bank Asya shares that it imposed on Aug. 7 amid a smear campaign conducted by pro-government media outlets about the ownership status of the lender. The stocks of the private lender slumped 20.16 percent to TL 0.99 at the end of the second session. According to a statement made before the first session by the Public Disclosure Platform (KAP), the shares of the bank has been opened to trade at the base price of TL 1.23 within a price margin of plus or minus 10 percent.

The state-run Anadolu Agency cited last week an official from the Banking Regulation and Supervision Agency (BDDK) as saying the Islamic lender Bank Asya had been put under the scope of Article 70 of Turkey's Banking Law, a move that gives the BDDK the power to restrict or temporarily halt the bank's operations, as well as to merge it with another bank. Bank Asya reacted strongly to the report, saying the bank will file lawsuits against the BDDK and media outlets that spread the speculative news report. Market observers criticized the Anadolu Agency for sharing exclusive details - the authenticity of which cannot be verified - regarding a privately run financial institution, suggesting that such reports are in violation of laws regulating and protecting banks in Turkey.

Turkish authorities haven't responded to pleas by Bank Asya that they act to prevent what the bank has called unfair attacks on it, Chief Executive Officer Ahmet Beyaz said. The lack of action risks setting a dangerous precedent about the independence of regulatory agencies, he said. In his first interview since Thursday, when a spokesman for Turkey's Banking Regulation and Supervision Agency said that the bank had been put under review under a law that gives the regulator broad powers over the lender, Mr. Beyaz accused BRSA officials of improperly revealing that the bank was under review.

Twitter user @fuatavnifuat claimed in a series of tweets sent on Tuesday that Deputy Prime Minister Ali Babacan and the Banking Regulation and Supervision Agency (BDDK) are sabotaging the Turkish economy in order to sink Bank Asya. Avni - who claims to be one of President Recep Tayyip Erdo?an's advisors - said Babacan authorized the BDDK to put 10 Turkish banks under close monitoring in order to make it seem as if it was not attempting to target only the Islamic lender Bank Asya. The unidentified Twitter user correctly predicted the second wave of arrests of police officers allegedly close to the Fethullah Gülen-inspired Hizmet movement last month. Avni had tweeted on a Monday night that raids would be conducted against the officers early the next day in the morning. The raids took place accordingly.

Turkish Islamic lender Bank Asya, whose shares were suspended and removed from all indices on Aug. 7 amid political pressure, will ask the authorities to end a month-long trading suspension, CEO Ahmet Beyaz said. Beyaz's statement comes on the heels of reports in the media last week that Turkey's banking watchdog the Banking Regulation and Supervision Agency (BDDK) had put Bank Asya under close monitoring. The reports claimed this would give the BDDK the power to restrict or temporarily halt Bank Asya's operations. Bank Asya said it will file a lawsuit against the watchdog for remaining indifferent to a smear campaign against the bank. Beyaz also said that Bank Asya would consider selling stakes or subsidiaries in case of a capital adequacy problem.

Holders of accounts with the Islamic lender Bank Asya have reportedly been subjected to threats about making deposits, while being urged to withdraw money from their accounts. Individuals said they had received calls from blocked numbers who had mysteriously obtained information regarding their bank account. The aim of the government seems to be to create panic among depositors of the bank and to frighten them so that they will rush to withdraw their money, throwing the bank into a liquidity crisis that would eventually justify the nationalization of the bank. Observers have called on BDDK head Mukim Öztekin to step down because the watchdog's reputation as an independent institution has become highly questionable since these recent developments.

Turkey's private Bank Asya has said it will fight authorities for not taking action even though a "massive smear campaign" against the financial institution has been ongoing for nine months. The private Islamic lender said in a statement on Thursday that it is going to fight the country's bank watchdog at court due to its silence amidst daily attacks on the bank. The statement came on a day when the Banking Regulation and Supervision Agency (BDDK) has reportedly taken over a wide range of powers at Bank Asya. The move gives the BDDK watchdog the authority to restrict or temporarily halt Bank Asya's operations, as well as to merge it with another bank.

Turkey's banking watchdog placed Asya Katilim Bankasi AS under watch and armed regulators with broad powers over the beleaguered Islamic lender. The move brings the bank one step closer to state seizure, as capital outflows and a ratings downgrade exacerbate damages from a political fight embroiling the lender, which has fallen from the largest of Turkey's four Islamic banks in December to third in terms of assets.

International credit rating agency Moody's has downgraded the long-term deposit rating of Turkey’s Bank Asya to Caa1 from B2, placing the note on review against any further deposit volatility at the bank. Bank Asya's financial strength was also adjusted downward. According to Moody's statement, the downgrade reflects increasing external pressures that may exacerbate the bank's deposit volatility, which has already shown evidence of significant outflows this year. Depending on the existent deterioration of the bank's financial fundamentals, the bank would need to receive external support, and it would face higher potential losses in case of a deterioration in the quality of the bank's assets and its ability to pay its depositors, Moody's also said.