Sep 17 2018

Işbank slides after Erdoğan says Treasury should take shares

Işbank, Turkey’s biggest listed lender by assets, slid in Istanbul trading after President Recep Tayyip Erdoğan suggested a 28 percent stake controlled by the country’s main opposition party should be handed over to the Treasury.

Shares in the company dipped 3.9 percent to 3.98 liras at 2:18 p.m. in Istanbul, just off a low for the day of 3.95 liras.

Erdoğan said no political party had the right to own interests in non-government banks in Turkey. The comments, which he made to journalists on his return from a trip to Azerbaijan, came as the country’s financial sector comes under pressure from a growing pile of bad loans swelled by a slump in the lira’s value and a slowdown in economic activity.

“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 investigated, Erdoğan said.

Kemal Kılıçdaroğlu, the leader of the main opposition Republican People’s Party (CHP), said the party is the representative of the stake on behalf of Turkey’s founder, Mustafa Kemal Atatürk, does not benefit financially from the holding and plays no role in the bank’s decision-making.

Kılıçdaroğlu urged Erdoğan to respect the memory of Atatürk, adding that dividend revenues from the Işbank shares are given to the Turkish Liguistic Society and the Turkish Historical Society, upon Ataturk’s wishes. Shareholder information on the bank's website backs up Kılıçdaroğlu's assertion.

"If the assets of Ataturk come under the auspices of anything, it should be the Treasury, not the banner of a political party," Erdoğan said.

The decline in Işbank's shares helped push the main banking index in Istanbul down by 2 percent to 98,639 points in Istanbul trading.

Perhaps Erdoğan plans to transfer the stake to the Turkiye Wealth Fund, Kılıçdaroğlu told reporters on Monday.

Last week, 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, is Treasury and Finance Minister since July and has been made deputy head of the fund.

The CHP’s shares in Işbank were once transferred to the Treasury following a military coup in 1980, but the party won a court case to get them back, Kılıçdaroğlu said. Erdoğan should look at the legal history regarding the stake, he said.

It is not the first time the CHP's stake in Işbank has become the subject of controversy. In 2016, one of Erdoğan's advisers called for the bank to be nationalised after Kılıçdaroğlu called Erdoğan a "tin-pot dictator".