Bloomberg
Istanbul
Turkey’s Asya Katilim Bankasi, pressured by the government of President Recep Tayyip Erdogan over links to an exiled cleric, said business conditions are less volatile after depositor flight and a third-quarter loss.
Since August there’s been “something of a stabilisation period, as far as the numbers go,” Deputy Chief Executive Officer Feyzullah Egriboyun said on a conference call.
“There are factors outside of our control, but as far as the bank goes, everyone is focused on achieving this stability.”
The Islamic bank, founded by followers of US-based cleric Fethullah Gulen, is under pressure from regulatory restrictions, withdrawals by government-owned companies and attacks from pro-government media. Erdogan accuses Gulen of orchestrating a corruption probe into his administration last year in an attempt to overthrow him. Gulen denies involvement.
Bank Asya, as it’s known, lost 301mn liras ($133mn) in the third quarter, the lender’s first unprofitable quarter since it went public in 2006, according to a November 10 statement. The shares fell 3% in Istanbul on Tuesday, extending their decline this year to 55%.
The bank’s capital adequacy ratio was 18.32%, above both the regulatory minimum and the industry average of 15.9%, according to an earnings presentation.
“The bank seems to have enough of a capital cushion to meet further withdrawals from depositors and recognize problematic loans, if any, before its capital ratio drops below regulatory thresholds,” Cagdas Dogan, a banking analyst at BGC Partners in Istanbul, said by e-mail.
In September, the bank’s shares swung between losses and gains while the regulator also halted and restarted trading several times. The government withdrew Bank Asya’s ability to collect tax on behalf of the state, according to an August 7 statement from the revenue administration, while the markets regulator also barred it from issuing Islamic bonds that month.
Investors have been straitjacketed since the bank was relegated to a markets watchlist in September, a decision that Egriboyun said has prompted shareholders to write to the regulator. Watchlist companies trade under conditions of heightened surveillance, and volume is limited. Bank Asya has the highest percentage of free-floating shares of any publicly traded Turkish bank.
Bank Asya will vote on plans to raise capital to 1.125bn liras from 900mn liras at an extraordinary general meeting on November 22 in Istanbul. The process probably won’t meet any regulatory challenges and should be over by the New Year, according to Egriboyun.
The bank reported assets of 16.5bn liras, down 41% from 27.8bn liras at the end of 2013. Deposits fell by 45% to 10.1bn liras.
In September, Bank Asya said it had brought lawsuits against about 300 media outlets, accusing them of a systematic slander campaign.“We would like to be forgotten by our beloved media, and just focus on our banking operations as we are supposed to do,” Egriboyun said.