Erdogan says AKP introducing bill to switch CHP’s Isbank ‘Ataturk shares’ to Turkish treasury

Erdogan says AKP introducing bill to switch CHP’s Isbank ‘Ataturk shares’ to Turkish treasury
Isbank Towers (left), the headquarters of Isbank in Istanbul's Levent business district. / Mimar77.
By bne IntelliNews October 15, 2018

Turkish President Recep Tayyip Erdogan said on October 13 that his Justice and Development Party (AKP) will introduce a bill in parliament switching the main opposition party’s shares in Turkey’s largest listed lender, Isbank, to the treasury.

The Republican People’s Party (CHP) holds a 28% stake in Isbank, bequeathed to it by Mustafa Kemal Ataturk, founder of the Turkish Republic.

Back on September 17, markets were spooked by a call from Erdogan for an investigation into members of the CHP who serve on the board of Isbank. The market took his comments as a sign that the strongman might be preparing to nationalise the bank—as called for by one of his top aides in 2016—in another move to personally control major levers of the country’s economy. Erdogan—who recently made himself chairman of Turkey’s sovereign wealth fund and has almost unchallengeable powers as the first Turkish executive president—actually pleased investors on September 13 when, despite repeating his objections to interest rate hikes, he stood back as the central bank went ahead with 625 basis points of monetary loosening. But his comments on Isbank caused a fresh wave of jitters.

“We as the AKP will present this issue to parliament. Thankfully the MHP [nationalist ally of AKP] said it will provide its support,” Erdogan told a rally in central Turkey’s Kayseri province, according to Reuters.

“God willing we will push this through parliament and secure the transfer of this stake to the Turkish Republic’s treasury,” he said.

Together, the AKP have 340 of the 600 seats in parliament, compared to the CHP’s 144.

The CHP says that under Ataturk’s will any profits from its Isbank stake flow to the Turkish Language Institution and the Turkish History Institution.

CHP leader Kemal Kilicdaroglu told Turkish media in mid-September that his party did not earn any money from its shares in Isbank, but maintained four members on its board to represent the bequeathed stake.

But Erdogan insists it is not appropriate for a political party to control a large stake of a major bank.

In a filing with the stock exchange on September 17, Isbank said it was too important “to be made a subject of political debate”.

 “After Ataturk passed away, his shares were transferred to the CHP,” the bank explained in the filing. “Currently, 31.79% of Isbank's shares are on free float. The majority of the shares are owned by the Isbank Supplementary Pension Fund, which represents the employees and retirees of the bank, with a 40.12% share; while Ataturk Shares constitute 28.09% of the total,” the bank added.

“There have been cases where Ataturk Shares have been represented either jointly or separately by CHP and the Treasury. However, this has had no impact on the operations and business model of the bank,” it also noted.

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