ANKARA
International credit rating agency Fitch has said Turkey's banking sector will not be significantly affected by the takeover of Bank Asya.
"The Turkish banking sector as a whole, and its participation [Islamic] banks in particular, should not be significantly affected by the transfer last Friday of control over Asya Katilim Bankasi to the Savings Deposit Insurance Fund," the agency said in a statement Wednesday.
The agency pointed out that Bank Asya was a relatively small part of the overall Turkish banking system, with a market share of around 1 percent, adding: "But the bank was the largest participation bank before the onset of its problems in 2014."
Bank Asya is a bank affiliated with U.S.-based cleric Fethullah Gulen, whom Turkish authorities accuse of leading a clandestine “parallel state” to undermine the Turkish government.
On May 30, Turkey's banking watchdog, Banking Regulation and Supervision Agency (BDDK), ruled for the takeover of Bank Asya by the Savings Deposit Insurance Fund (TMSF) “as a result of investigations within scope of banking law”.
Fitch emphasized that Turkey's banking sector was “generally well managed”.
“We regard the Banking Regulation and Supervision Agency as a reasonably strong regulator," it said.
"In 2014, Asya had suffered a 50 percent outflow of deposits, accompanied by negative public statements by high-ranking government officials about the bank's financial position.
Participation banks represent around 6 percent of total banking sector assets. Turkey's three state-owned commercial banks, Ziraat Bank, Halkbank and Vakıfbank (Prime Ministry Directorate General of Foundations), are expanding into the banking sector through specialized subsidiaries. Ziraat's banking subsidiary was inaugurated in May.
According to the Turkish government, the “parallel state” or “parallel structure” refers to a purported group of Turkish bureaucrats and senior officials embedded in the country's institutions, including the judiciary and police, who are allegedly trying to undermine the Turkish government.
