IslamicFinance.de

The nonconsolidated loss of Bank Asya in the first quarter of this year was TL 5.8 million ($2.2 million), according to the income statement the bank released on the Public Disclosure Platform. The bank had made a TL 40.81 million net profit in the same period of last year. Bank Asya's net loss by the end of 2014 was TL 813 million. While the total assets of the bank were TL 23.2 billion in the first quarter of 2014, this figure decreased to TL 11.97 billion in the same period of 2015. On May 29, Turkish banking regulators approved the decision to seize all of Bank Asya's shares due to the bank's failure to fulfill its obligations despite the measures taken by Turkey's banking watchdog, the Banking Regulation and Supervision Agency (BDDK).

Kuveyt Türk will sell sukuk to qualified investors as well as to people through public offerings as part of the TL 1 billion ($373.65 million) issuance ceiling program taken from the Capital Markets Board in 2015. Therefore, the bank plans to issue TL 200 million of sukuk, which is due for 189 days after collecting demands on June 24, June 25 and June 26. Additionally, it aims to issue TL 800 million of sukuk in total by the end of 2015 to increase its resource diversity. Investors' interest in the bank's issuances valued at TL 1 billion from 2014 to 2015 and public offerings valued at TL 150 million in 2013 showed possible growth in the upcoming issuances, and this is why the bank has increased its aims.

Information technology specialists from Turkey's banking watchdog, the Banking Regulation and Supervision Agency (BDDK), discovered that 800,000 transaction records were deleted at Bank Asya, which was seized by the Saving Deposit Insurance Fund (TMSF) in February. According to an investigation, the mentioned transactions were deleted just after the Dec. 17, 2013 operation. After the Gülen Movement was included in the Red Book as a national security threat and deemed a terrorist organization, the accounts of some of the people that are included in the movement will be investigated. In case any relations to the movement's members are revealed, the bank may be forcibly terminated for national security reasons.

Kuwait Finance House (KFH) is exploring the possible sale of assets including its Malaysia unit, as the Islamic lender looks for a leaner structure while seeking greener pastures through its Turkey franchise. KFH is restructuring activities ahead of a planned divestment by its largest shareholder, the Kuwait Investment Authority (KIA). The firm has hired Credit Suisse to advise on its options, including the potential sale of a Malaysia unit launched in 2005 that serves as a hub for southeast Asia. KFH did not give further details. A shift away from Malaysia, where KFH holds a valuable licence but lacks scale, would help it focus on Kuveyt Turk, the largest Islamic bank in Turkey with over 500 branches.

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.

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.

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.

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.

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.

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.

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.

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 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.

Turkey's Independent Industrialists' and Businessmen's Association (MÜSiAD) is organizing the 15th MÜS?AD International Fair "High Tech Port by MÜSIAD" themed "The World is Changeable: Change the Business, Change the World," and the 18th International Business Forum (IBF) Congress which will be held from November 26-30 at Istanbul's CNR Expo Center. IDB's President Dr. Ahmed Mohammad Ali will deliver a speech in the opening session of the IBF and the keynote speech will be delivered by Mushtak Parker, editor of the Islamic Banker Magazine . This year, the events will be enriched with the remarks of ministers and the input of academics, public authorities and experts.

The chairman of Istanbul's Stock Exchange, ?brahim Turhan, has said that public offerings of debt instruments is increasing. He made the comments in response to questions from press members after the 11th Synergy Meeting held in Bursa by the Balkan and Rumelia Industry and Business Association (BALKANS?AD). He also announced for the first time that the Islamic Development Bank, of which the Turkish Treasury is also a shareholder, will be quoting non-interest bearing notes (sukuk) of $10 billion at Istanbul's Stock Exchange Market. He added that soon a major insurance company will be offered to the public, followed by an important bank due for a capital increase.

The third Turk-Arab Youth Congress started on Oct. 24 and was hosted by the Istanbul Youth Assembly Foreign Affairs Commission at the Istanbul Congress Center to create a platform for Turkish and Arab youth to discuss a vision for the region's future. A team of well-educated youth from around the world gathered at the three-day program titled "How to Lead the Future." Several sessions were held on the first day of the congress, discussing different issues of the region. On the second and third day, workshops were held under the subsidiary bodies of the congress and they published a final declaration with the remarks of the participants.

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.

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.