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Turkish Regulators Seize Shares in Islamic Lender


FILE - A man walks past an ATM machine of Bank Asya in Istanbul, Turkey, Aug. 12, 2014.

FILE - A man walks past an ATM machine of Bank Asya in Istanbul, Turkey, Aug. 12, 2014.

Turkish banking regulators on Wednesday seized a small stake in the Islamic lender Bank Asya over an alleged illegal share sale, the latest round in a battle between Ankara and a U.S.-based Muslim cleric.

The bank, founded by followers of the Islamic scholar and cleric Fethullah Gulen, has been battered by President Recep Tayyip Erdogan's attempts to wipe out Gulen's religious movement, which he accuses of attempting to build a "parallel state.'' The campaign has added to investor fears that political interventions are damaging Turkey's financial system.

Regulators last month took over the management of Bank Asya after the government said it had failed to meet some legal criteria.

The banking watchdog said in a statement Wednesday that Turkey's Savings Deposit Insurance Fund had seized preferred shares in Bank Asya held by a publishing company and a construction firm, citing irregularities in the sale of their parent company, Kaynak Holding, to a Dutch firm in January.

Like most of the shareholders in Bank Asya, Kaynak Holding, which holds nearly 6.5 percent of the bank, is close to Gulen's movement. The watchdog said that only preferred shares had been seized, but did not specify the size of that holding.

Bank Asya declined to comment.

A Kaynak official, who declined to be identified, said only that the watchdog had announced the seizures previously: "We are having difficulty understanding why it is being declared as a new development.''

Reuters could not reach the publishing company, Surat Basim, or the construction company, Forum Insaat, for comment.

The announcement came just hours after the ratings agency Standard & Poor's warned that actions against Bank Asya illustrated "the potential for political risk, or the perception of it, to directly or indirectly spill over into the financial system."

Turkey's prime minister and his economic team are seeking to calm nerves among top investors in New York who hold more than 20 percent of the main Istanbul stock index, after Erdogan's tirades against the central bank helped send the lira to record lows.

Depositors in Bank Asya, including state-owned firms and institutions, last year withdrew 4 billion lira ($1.7 billion) from the bank, amounting to about 20 percent of its deposits, according to media reports.

Shares in Bank Asya, of which around 54 percent are publicly traded, were moved to the stock exchange's watchlist market in September, where companies are kept under surveillance and their shares trade for only a limited time each day.

The shares have lost nearly half their value in the last 12 months. They fell 1.6 percent Wednesday.

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