Asya evokes Abil as investors exit

Bank Asya logo is seen at a branch in Istanbul September 17, 2014. The head of Turkey's Bank Asya has vowed to strengthen its capital base and see off what he described as a systematic campaign to undermine it, warning the attack on his bank could sour foreign investors' views of Turkey. The Islamic lender, with more than a million deposit-holding customers and 280 branches, is caught at the centre of a power struggle between President Tayyip Erdogan and Fethullah Gulen, an Islamic cleric whose sympathisers founded the bank.

Bank Asya logo is seen at a branch in Istanbul September 17, 2014. The head of Turkey's Bank Asya has vowed to strengthen its capital base and see off what he described as a systematic campaign to undermine it, warning the attack on his bank could sour foreign investors' views of Turkey. The Islamic lender, with more than a million deposit-holding customers and 280 branches, is caught at the centre of a power struggle between President Tayyip Erdogan and Fethullah Gulen, an Islamic cleric whose sympathisers founded the bank.

Published Sep 21, 2014

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The stocks and bond market rout at Turkey’s Bank Asya is starting to resemble the investor panic that overwhelmed African Bank Investments Limited (Abil) last month.

The Islamic lender has lost more than half its market value since trading resumed on Monday, after the shares were suspended from the Istanbul bourse for more than a month.

On each of the six sessions since the restart, the stock has closed down 10 percent, the maximum permitted by the exchange.

While the slump at Bank Asya mirrors a three-day run of losses at Abil last month, before it was rescued by the South African government, that’s where the similarities end.

Investors deserted Abil after it surprised shareholders by saying it needed a second capital injection in less than a year to cover bad-loan losses.

Asya is a casualty in a political feud that has pitted Erdogan against exiled Islamic cleric Fethullah Gulen.

“Despite both being in trouble, the stories couldn’t be more different,” Michael Harris at Renaissance Capital said on Wednesday.

“African Bank lent poorly to South Africa’s lower quality borrowers and paid the price, while Asya has been collateral damage in the fight between Erdogan and Gulen.”

Bank Asya’s deposits dropped 25 percent in the second quarter amid then-Prime Minister Erdogan’s criticism of the lender’s ties to Gulen and the withdrawal of funds by companies including Turkish Airlines, which is 49 percent government-owned.

The lender plans to increase its capital to 1.125 billion liras (R5.58bn) from 900 million liras in a rights issue, it said on Tuesday.

Erdogan and Gulen, a former ally who lives in self-imposed exile in Pennsylvania, became enemies after Erdogan accused Gulen of instigating a corruption probe against members of his government in December.

Companies linked to Gulen, such as Asya and miner Koza Altin Isletmeleri, say they’ve been subject to negative regulatory actions and smear campaigns in the media since.

While this time last year Asya was Turkey’s largest listed Islamic lender, its market value had fallen to 720 million liras by the close of trade on Wednesday, making it the smallest of the nation’s 16 bank listings. – Bloomberg

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