The Savings Deposit Insurance Fund (TMSF) announced yesterday that the operations of Bank Asya, which the TMSF seized in May last year, will be temporarily frozen when markets opened following the failed coup attempt on Friday night. According to the official announcement released yesterday, the decision was made by the Fund Council in accordance with Article 107 of the Banking Law.
The TMSF announced on Friday, the day when the tender for the sale of Bank Asya's shares was scheduled, that no bid had been offered for the tender, adding that the next step regarding the destiny of the bank would be taken by the Fund Council.
The management of the Borsa Istanbul stock exchange (BIST) announced through the Public Disclosure Platform (KAP) that Bank Asya's shares on the BIST would be closed for transactions as of Friday, although shares were planned to be opened to transactions following the bank's sale.
According to Article 71 of the Banking Law, banks are given shareholder rights as well as management and inspection exceptions for dividend rights, but this requires restructuring and the bank's financial strength to be sufficient to handle any takeover, merger or acquisition which might occur within one year, along with an additional three-month process after the takeover is initiated. Otherwise the legal procedure requires a bank to be liquidated if it cannot be integrated into the financial system.
Believed to be the main financial institution for the controversial Gülen Movement and affiliated companies, Bank Asya's financial situation deteriorated after authorities began probing the shadowy organization. The bank started reporting huge losses throughout 2015, while shares were suspended from trading on the BIST on Sept. 26, 2014, with the rationale of preventing further losses and that high volatility threatened investors.
An audit report of Bank Asya from the Banking Supervisory and Regulatory Authority (BDDK) in May last year said the bank's privileged shareholders had signed blank transfer contracts, and that a large number of dubious transactions were conducted. The audit report indicated that 40 percent of the bank's privileged shareholders had signed blank transfer contracts, making the bank's shareholding structure questionable. Coupled with the deterioration of the bank's financial structure, the BDDK ruled on May 29, 2015 that the TMSF completely control all shares of Bank Asya, due to the bank's failure to fulfill its obligations. The BDDK said that the bank's profits and capital base had collapsed, despite being put under the scope of Article 70 of the Banking Law which regulates the BDDK's intervention in troubled banks. The BDDK added that Bank Asya's financial structure, administration and operations posed risks to depositors as well as the security and stability of the financial system.
The Gülen Movement is accused of infiltrating state institutions through large-scale cheating and nepotism with aims to topple the democratically elected government through investigations launched by members who had infiltrated the police and judiciary and prepared investigative files based on fabricated evidence and illegal wiretapping.