Erdoğan’s meddling in Turkey’s top private bank risks further volatility - expert
Turkish President Recep Tayyip Erdoğan’s threat to transfer an opposition party’s 28 percent stake in the country’s largest private bank to the treasury could further erode investor confidence after a rock financial year, said Aykan Erdemir, a former opposition politician and fellow at the Foundation for Defense of Democracies.
Erdoğan on Tuesday said the Treasury would take over the main opposition Republican People’s Party’s (CHP) 28 percent stake in Işbank. Those shares were bequeathed to the party in the will of Turkey’s and CHP’s founder Mustafa Kemal Atatürk.
Erdoğan has both ideological and economic reasons for interfering in Işbank, Erdemir wrote in a post on the Foundation for Defense of Democracies. By taking over the shares, he would remove the CHP’s four chairs on the bank’s board, and he would also be able to dip into Işbank’s coffers.
“While Erdoğan’s meddling has weakened Turkey’s public lenders, Işbank has continued to be a beacon of good governance,” Erdemir wrote. In the first three quarters of 2018, for example, Işbank reported a profit of 4.6 billion liras ($876 million). The bank has also avoided controversies that have plagued public banks like Halkbank, which is set to receive U.S. penalties as it helped gold trader Reza Zarrab evade U.S. sanctions on Iran.
“Erdoğan’s threats against Isbank risk further volatility in the Turkish banking sector,” Erdemir wrote. “The country’s lenders are already under great strain, losing over a quarter of their value within a year. Both Erdoğan and the Turkish economy would fare better if the Turkish president could keep his hands off the country’s lenders and the lenders out of his partisan polemics.”