IslamicFinance.de

Do?an Cans?zlar, former head of the Capital Markets Board (SPK), has warned, in light of claims that a number of Turkish banks are in difficulty, that a smear campaign orchestrated by President Recep Tayyip Erdo?an against Bank Asya could lead to a worse financial crisis than the one Turkey suffered back in 2001. At the beginning of the week, Erdo?an publicly threatened independent regulatory body, the Banking Regulation and Supervision Agency (BDDK), over its lack of action against Bank Asya, saying the agency must take a decision on the bank and follow through on it. The banking industry may be in worse shape than many think. On Tuesday Twitter user @fuatavni revealed the names of eight banks that he maintains are in financial difficulties.

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.

Aktif Bank has received regulatory approval to issue 200 million lira ($91 million) in Islamic bonds. The lender will sell the sukuk to qualified investors through its asset leasing company, Aktif Bank Sukuk Varlk Kiralama. It gave no time frame for the deal. Last year, Aktif Bank helped raise a small one-year 100 million lira sukuk for construction-to-energy firm Agaoglu Group using a mudaraba structure. Besides, Turkish conglomerate Dogus Group received regulatory approval last month to raise $370 million via sukuk in what would be the first dollar-denominated corporate transaction of the kind in the country. The Capital Markets Board has outlined new regulations to allow a wider range of sukuk structures.

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.

Moody's lowered the long-term deposit rating of Bank Asya, which is known for its close ties to the controversial Gülen Movement, from "Ba2" to "B2". The financial strength rating of the Gülenist bank has been downgraded from "D-" to "E+". According to the rating agency's statement, the bank's standalone financial strength rating was lowered due to a fall back in negative asset-quality trends, funding volatility, and post-provision profitability. Moody's also stated that the bank has been placed on review due to uncertainty in deposit ratings and that the financial strength note is also under review in case of a possible reduction.

Bank Asya, which is known for its close ties with the Gülen Movement, is now in an even more critical condition after the Central Bank of the Republic of Turkey (CBRT) reportedly issued a "warning letter" to the Banking Regulation and Supervision Agency (BDDK). The "confidential" note delivered to the BDDK states that the bank might not be able to provide the required reserves for its deposits in the central bank. The bank faced a TL 6 billion deposit outflow and a TL 7.6 billion decrease in assets as well as an 81 percent drop in its profits in recent months. Furthermore, the default loan amount of the bank and the rate of loans being followed up have reached critical levels. The BDDK started to investigate transactions of Bank Asya in order to determine whether the bank will be able to fulfill its obligation.

Hasan Say?n, a major shareholder of Bank Asya, is accused of insider trading for capitalizing on his knowledge to trade away his shares of the Gülenist bank and illegally earning millions of dollars. It was determined that Hasan Say?n traded millions of dollars on the stock exchange right before it was announced that Bank Asya was negotiating with Qatar Islamic Bank (QIB). The Capital Market Board (SPK), which is investigating the insider trading claims, is now getting ready to file a criminal complaint. Bank Asya had reportedly invited the holders of 290 privileged shares of the bank to discuss partnership options with the QIB, including Hasan Say?n and ?brahim Say?n. It was determined that both of them then traded millions of Bank Asya shares.

Turkish Islamic lender Bank Asya said in a note to Borsa ?stanbul that the company continued its banking operations smoothly, defying any kind of uncertainty regarding the bank’s shareholders and board. The bank’s statements follow on the heels of an announcement from state bank Ziraat Bankas? a few hours earlier. Ziraat said it had ended unofficial talks to acquire Bank Asya, saying such a purchase was not in line with its priorities. Observers said the statement from Bank Asya would help ease earlier concerns that the bank would be seized by the state amid an intense pressure from President-elect Recep Tayyip Erdo?an’s ruling party.

The Turkish regulator Capital Markets Board (SPK) said it won’t consider Bank Asya’s (ASYAB) application to sell 140 million liras ($65 million) in debt, dealing another blow to the suspended Istanbul-based lender. It cited ambiguity over ownership. The shares have been on hold since Aug. 7, after large swings on contradictory government statements about a possible state purchase. Bank Asya was subsequently suspended from trading on the Istanbul exchange and removed from the main indexes. Regulators have also revoked the bank’s right to collect tax on behalf of the government. The bank said it applied to sell the debt in March. Bank Asya shares declined 14 percent this year before being suspended. That compares with a 20 percent gain on the Turkish banking index this year.

Islamic lender Bank Asya has received another blow, as the Customs and Trade Ministry has joined with two other state institutions in cancelling their contract with the bank. The ministry has decided to terminate customs tax collection protocols with Bank Asya as a result of assessments made, the ministry said in a press statement released on Aug. 13. The ministry informed the lender regarding the annulment on Aug. 12 and the cancellation will take effect on Sept. 12, the statement also noted. Last week, the Revenue Administration and Social Security Institution had separately announced annulling their contracts with the lender.

The Borsa Istanbul issued a statement providing the reason for suspending the trading of shares of Bank Asya under the name ASYAB between August 7 and 12. The statement noted that the reason for the suspension was the contradictory news announced by various media institutions about the partnership structure of the bank and news which has caused fluctuation in the prices of share certificates. Therefore, it was noted that ASYAB share certificates are being temporarily suspended from trade. It further explained that the temporary suspension of trade continued since the statement Bank Asya gave to the Public Disclosure Platform on Aug. 8, 2014 did not completely remove the current uncertainty. In this respect, in order to not damage trust, clarity and the stability of the market, the temporary suspension of trading ASYAB stocks continued until Aug. 12, 2014, the BIST remarked.