On Tuesday 3rd February, Turkey’s banking regulator ordered the seizure of Bank Asya, Turkey’s largest private participation bank affiliated with the Fethullah Gulen-inspired Hizmet movement, on the same day that a Turkish foreign ministry spokesman announced that Gulen’s passport had been cancelled and on the day Gulen’s article appeared in the New York Times titled ‘Turkey’s Eroding Democracy’ in which he says that “Turkey has now reached a point where democracy and human rights have almost been shelved.”
In the late hours of Tuesday evening, Turkey’s Savings Deposit Insurance Fund (TMSF) seized control of the Bank and assigned a new Board of Directors and CEO on the grounds that the Bank did not respond on time to the banking regulator’s additional request for information. The former CEO and Board of Directors have responded by saying that they were asked for additional concerning some of their Board Members but that the banking regulator took the decision to seize control before they could reply and that decision is both unlawful and completely irrational.
The banking regulators decision to seize control of the bank management is not the same as nationalising it. Had yesterday’s decision led to a mass exodus of funds, as per Northern Rock in 2008, then the Bank would have lost enough liquidity paving the way for its nationalization and complete seizure. Currently, the Bank is still owned by its shareholders and the decision to seize control of its management can be reversed by court order. Ernst & Young conducted the latest independent audit report of Bank Asya in September 2014 in which it did not state any structural irregularities and that the Bank’s liquidity was in good form while pointing out a decrease in profits.
What Does This Mean?
This latest move against Bank Asya needs to be contextualised. In December 2013, a series of corruption investigations implicating President Erdogan and his inner circle went public as prosecutors concluded their investigations into corruption, money-laundering and bribery charges by arresting and questioning a number of suspects. As per the Gezi park protests, Erdogan responded by claiming that these were the doing of a “coalition of foreign powers” with “domestic pawns” bent on overthrowing the government. Erdogan claimed that the Hizmet movement was the domestic “puppets” of this “international plot”. Accordingly, he disrupted the ongoing judicial investigations by taking control of the judiciary and dismissing, demoting and reassigning hundreds of judges and prosecutors and approximately sixty thousand police officers, civil servants and other state employees. Similar onslaughts have taken place against the media and business sectors in Turkey with the arrest and charge most recently of Dutch journalist Frederike Geerdink on terrorism legislation and the arrest of twenty journalists and media personnel in December 2014.
Since Bank Asya is affiliated with Hizmet it has faced consistent and concerted attacks by the government and pro-government media, including but not limited to, the immediate withdrawal of all state and pro-government business owned deposits in Bank Asya, the cancellation of all state protocols with the Bank and Erdogan’s statement that “that Bank has already gone bankrupt” back in September 2014 – a clear violation of banking laws criminalising any statements likely to influence public confidence in a bank. Despite all efforts and even yesterday’s decision however, Bank Asya’s liquidity remains very healthy. Contrary to government expectation, there has been no mass exodus of funds; to the contrary private account holders have been depositing and transferring savings into Bank Asya accounts to prevent the Banks forced bankruptcy.
Dr Ismail Mesut Sezgin, Director of the Centre for Hizmet Studies, said:
“This latest move against Bank Asya is within the league of Turkey’s ban against Twitter and YouTube; it is that irrational and irresponsible if not more. All Turkey-observers and independent media see this for what it is; another attempt at sinking a bank founded by shareholders with whom President Erdogan has personal and political differences. Irony or calculation has it that the decision was made the same day that Gulen’s piece appeared in the New York Times in which he criticised Erdogan of clamping down on civil society, media, the judiciary and free enterprise. That same day, Gulen’s passport was cancelled for the umpteenth time. Measures, aimed at bankrupting Turkey’s largest private participation bank, will have severe consequences for Turkey’s economy and for investor confidence, especially if they succeed. That ordinary private account holders are flocking the bank to deposit, not withdraw, funds is another irony in this bizarre story.”
Notes to editors
London-based and founded in 2014, the Centre for Hizmet Studies provides access to reliable information and resources for serious study of Hizmet. The Centre aims to facilitate, as well as present, critical analysis of Hizmet for both academic and popular audiences. Its activities include research, resource development, online support, discussion forums and print publication.
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