Shares in top Turkey bank slide after Erdogan queries opposition stake

Ankara (AFP) –


Shares in Turkey's largest private lender Isbank tumbled over five percent on Monday after President Recep Tayyip Erdogan questioned why the main opposition party should hold of over a quarter of its shares.

The Republican People's Party (CHP) holds a 28 percent stake in Isbank, a shareholding that dates back to the legacy of Mustafa Kemal Ataturk who founded both modern Turkey and the party.

Erdogan said in comments published on Monday that there should be an investigation into why the CHP was able to have four of its members on the board of the bank, Turkey's largest private lender measured by assets.

"They cannot get money but they have four members on the board. What do these four members do? This must be looked into," he told journalists aboard his plane returning to Turkey from a visit to Azerbaijan, according to Hurriyet daily.

Erdogan argued it would be more appropriate for the holding to be under the treasury's control, saying "the shares of Ataturk" should not belong to a political party.

"If it comes under anything, it should be the treasury," he said.

After 1445 GMT, Isbank shares were down 5.3 percent to 3.92 lira ($0.62).

In a rare rebuke from a top financial institution to the head of state, Isbank insisted it was "an important institution that should never be used for political purposes".

"Considering the busy and sensitive agenda of our country, it is a matter of national interest to make all assessments taking the importance of our institution into consideration," the bank said.

- 'Not a partner' -

Isbank was set up on August 26, 1924 at the initiative of Ataturk.

The bank's initial capital of one million lira was provided by Ataturk, bureaucrats and army members, as well as prominent tradesmen of Anatolia, according to Isbank.

After Ataturk's death in 1938, his shares were transferred to the CHP, as per his will.

In the past, the shares have been represented either jointly or together by the CHP and the treasury, the bank said, but added that "this has had no impact on the operations and business model of the bank."

Dividends from the shares go to the Turkish Linguistic Society and Turkish Historical Society but not to the CHP.

CHP leader Kemal Kilicdaroglu reiterated on Monday that the party received no money from the bank nor was it a "partner" of the lender.

The lender and other banks have been affected by investor concerns over domestic economic policy and the drastic fall in the lira against the US dollar last month following the Ankara-Washington spat over the detention of an American pastor.

Ratings agency Moody's last month downgraded its credit ratings on 20 Turkish financial institutions, including Isbank, which it downgraded by two notches.