Turkey Defends Seizure of Bank Linked to President's Foe

Turkey on Wednesday defended the seizure of an Islamic bank allied to an arch-foe of President Recep Tayyip Erdogan, the latest crackdown against US-exiled cleric Fethullah Gulen.

Bank Asya has suffered major losses since last year after becoming embroiled in a bitter feud between Erdogan and his former ally Gulen, whom the president accuses of seeking to overthrow him.

The state-run Savings Deposit Insurance Fund (TMSF) seized 63 percent of Bank Asya shortly after the banking watchdog (BDDK) ruled in favour of its seizure and sacked the entire existing management team, citing a lack of transparency.

The BDDK said in a statement on its website late Tuesday that it seized the bank "because the institution has not presented a partnership structure that is transparent and open enough to allow for effective regulation."

Bank Asya said on Wednesday that the move would not affect its operations. 

In first comments since the seizure, Economy Minister Nihat Zeybekci said the takeover of the bank would end speculation and restore a safer environment. 

"Whoever is concerned, what has to be done has been done," he told reporters in the capital Ankara. 

The watchdog sacked the bank's executives based in Istanbul and appointed a new board of directors immediately after the seizure. 

Bank Asya, founded by followers of Gulen in 1996, came under pressure from regulatory restrictions, withdrawals by government-run companies and attacks from pro-government newspapers.

The pressure on Bank Asya resulted in a crash in its share price and a massive downscaling of its operation.

The bank's shares have lost 70 percent of their value since December 17, 2013, when a high-level corruption probe emerged targeting key Erdogan allies -- blamed by the authorities on Gulen.

The bank said in November that it lost 301 million liras ($133 million) in the third quarter -- its first unprofitable quarter since going public in 2006.

According to data on Bloomberg, the bank had 12.6 billion liras ($5.2 billion) of loans and 9.8 billion liras of deposits at the end of September. 

Deposits were almost twice that figure a year earlier, before the feud between Erdogan and Gulen prompted the withdrawals.

The seizure of the bank is the latest crackdown against Gulen's powerful movement known as "Hizmet", which brings together interests ranging from finance to schools to media. 

Erdogan accuses Gulen and his followers of being behind the sweeping corruption probe that rocked his government while he was prime minister.

The president has vowed no mercy in the fight against Gulen and the authorities have over the last year, purging the police force and judiciary to rid them of pro-Gulenist elements.

State-run Anatolia news agency reported on Tuesday that Turkey had cancelled Gulen's passport in a further escalation of Erdogan's campaign against the 73-year-old cleric, who has lived in Pennsylvania since 1999.

In a rare opinion piece published in the New York Times Tuesday, Gulen accused Turkey's leaders of "leading the country toward totalitarianism."