Erdoğan’s government to seize Turkey’s largest listed bank

Turkish President Recep Tayyip Erdogan repeated his determination that Turkey’s largest listed bank, Türkiye İş Bankası (İşbank), would be handed over to the Treasury, during his party’s parliamentary group meeting on Tuesday.

“With God’s permission, İş Bankası will become the property of the Treasury,” Erdoğan said, signaling an imminent parliamentary vote to pass legislation allowing the Ministry of Treasury and Finance to seize shares of the bank owned by the main opposition Republican People’s Party (CHP).

The CHP holds a 28 percent share in İş Bankası left to it in the will of the founder of modern Turkey, Mustafa Kemal Atatürk, who was also the founder of the bank. The CHP receives no revenues from its stake and only appoints four board members.

After Erdoğan’s remarks, İş Bankası shares fell as much as 6 percent and were trading 1.2 percent lower as of 1 p.m. in Istanbul, Bloomberg reported.

Last September Erdoğan appointed himself head of the country’s sovereign wealth fund, which controls assets previously overseen by the Treasury and parliament including government stakes in two state-run banks and Turkish Airlines. Berat Albayrak, Erdoğan’s son-in-law and treasury and finance minister since July, has been made deputy chairman of the fund.

The CHP’s shares in İş Bank were once transferred to the Treasury following a military coup in 1980, but the party won a court case to get them back, CHP Chairman Kemal Kılıçdaroğlu said, adding that Erdoğan should look at the legal history of the stake.

This is not the first time the CHP’s stake in İş Bank has become the subject of controversy. In 2016 one of Erdoğan’s advisers called for the bank to be nationalized after Kılıçdaroğlu called Erdoğan a “tin-pot dictator.”

İşbank would not be the first bank seized by the Erdoğan government. Bank Asya, one of three banks with the highest liquidity in Turkey at the time, was taken over by the government on Feb. 4, 2015, contrary to strict statutory banking regulations against such a drastic move.

Bank Asya’s license was cancelled on July 22, 2016 — seven days after a controversial coup attempt — by Turkey’s Banking Regulation and Supervision Agency (BDDK). The banking watchdog had ruled for a complete takeover of all shares of the Islamic lender by the Savings Deposit Insurance Fund (TMSF) in May 2015.

The bank, which had 210 branches, 5,000 employees and around 1.5 million customers, was founded on Oct. 24, 1996 upon formal approval from regulators. It operated under the supervision of independent regulatory bodies in Turkey that were responsible for overseeing the banking sector.

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