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Turkey's Erdogan calls for investigation into opposition role at Isbank

2018-09-17

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SULAIMANI — Turkish President Tayyip Erdogan said authorities should look into members of the opposition who serve on the board of Isbank, Hurriyet newspaper said on Monday (September 17), hitting the shares of the country’s largest listed lender.

Erdogan and his aides have previously called for greater scrutiny of the main opposition Republican People’s Party (CHP) over its 28 percent stake in Isbank, bequeathed to the party by Mustafa Kemal Ataturk, founder of the Turkish Republic, according to Reuters.

While the CHP does not receive dividends from the stake - those go to cultural associations, as stipulated by Ataturk’s will - party members do have seats on the bank’s board.

“It owns 28 percent of Isbank shares. It can’t get money from there but it has four board members. What do these four members do? This must be looked into,” Hurriyet quoted Erdogan as telling reporters on his plane returning from Azerbaijan.

Isbank shares fell 3.6 percent to 3.99 lira by 0805 GMT, underperforming a 0.3 percent increase in Istanbul’s benchmark BIST-100 index.

Isbank said it was too important to be made a subject of political debate, adding that trust in banks needed to be preserved for the sake of the national economy.

The bank said there have been times when Ataturk’s 28.09 percent stake had been represented by the CHP and the Treasury, together or separately.

“This does not have any impact on our bank’s activities or the way it does business,” it said.

Since assuming a more powerful executive presidency in July, Erdogan has tightened his grip on the economy and monetary policy, appointing his son-in-law as finance minister and taking charge of the sovereign wealth fund. Fears about growing authoritarianism and the lack of central bank independence have helped send the lira down 40 percent this year.

 

NATIONALIZATION

Erdogan wants to see lower interest rates to spur lending and boost economic growth. He has repeatedly called on listed lenders to extend more credit to the real economy.

Economists say the economy is headed for a hard landing and banks are likely to see a spike in bad debt.

One of Erdogan’s aides, Yigit Bulut, in 2016 called for the nationalization of Isbank, after the leader of the CHP referred to the president as a “tin-pot dictator”.

Authorities previously seized the assets of Bank Asya, a lender started by followers of the U.S.-based Islamic preacher Fethullah Gulen, a former Erdogan ally whom the government blames for an attempted coup in 2016.

On Monday, the head of the CHP, Kemal Kilicdaroglu, said it did not interfere in the bank and was holding the shares out of duty to Ataturk’s legacy. He speculated that Erdogan wanted to transfer the stake to Turkey’s sovereign wealth fund.

“Everyone needs to respect Ataturk’s heritage. None of our colleagues who are part of the Isbank board meddle in its banking affairs, they only carry the honor of representing Ataturk’s shares,” he told reporters.

“Does he want to transfer it to the wealth fund? This needs to be looked at.”

The government started the wealth fund in 2016 to develop and increase the value of Turkey’s strategic assets, and has since transferred billions of dollars of state assets to it, including stakes in flag carrier Turkish Airlines, major banks and fixed-line operator Turk Telekom.

(NRT/Reuters)