Turkey Said to Drop Isbank Takeover From Agenda Until Ballot
(Bloomberg) -- Turkey isn’t rushing plans to seize the main opposition party’s stake in the nation’s largest listed lender, Turkiye Is Bankasi AS.
A legislative change allowing the Treasury to take over the CHP’s 28 percent holding in Isbank isn’t currently on the list of bills the ruling party expects to present to parliament before municipal elections in March, according to a senior official with direct knowledge of the matter.
Parliament in Ankara will be busy through late February with a so-called omnibus bill on mining as well as electing a speaker, the person said, asking not to be identified. Although currently not in the pipeline, a proposal for a legislative change with implications for the bank’s shares could be brought to parliament at President Recep Tayyip Erdogan’s instruction, the person said.
Isbank has been caught in the crossfire as Erdogan escalates his rhetoric against the opposition to energize his electoral base ahead of balloting. The latest round of brawling comes with the banking sector grappling with mounting bad debts, the onset of a recession and a knock-on slowing of loan growth.
Economic expansion underpinned by bank lending has been key to Erdogan’s electoral success for over a decade. But credit growth turned negative after the lira’s crash in August and is shrinking at an annual pace of around 10 percent.
Isbank shares trimmed losses of as much as 2 percent after Bloomberg reported on the ruling party’s legislative plans, and were trading 0.4 percent lower as of 5:21 p.m. in Istanbul.
A spokesman for the ruling AK Party declined to comment.
“Calls to seize shares in Isbank have been a regular part of Erdogan’s pre-election posturing over the years, and have never amounted to anything,” said Jonathan Friedman, London-based Turkey analyst at Wallbrook, a global risk consultancy.
While the CHP party doesn’t get any dividends from its stake in Isbank, Erdogan accuses it of “exploiting” the memory of Mustafa Kemal Ataturk, the founder of modern Turkey, who bequeathed Isbank shares to the party he created in his will. The president contends that what once belonged to the nation’s founder shouldn’t be owned by a political faction.
The lender has said in the past that any effort to nationalize it would amount to a financial crime. The CHP has resisted Erdogan’s demands to give up its stake in the lender and its four seats on the board.
Erdogan is using Isbank to punish the opposition, CHP lawmaker Gursel Tekin said by phone. The president will inflict lasting damage on the already fragile economy by using the country’s most trustworthy bank as a political tool, Tekin said.
Isbank’s pension fund holds 40 percent of the lender, which has a market value of about 24.2 billion liras ($4.6 billion); about 70 percent of the 32 percent free float is held by foreign investors.
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