TODAY’S – Plan to nationalize foundation shares in VakIfbank stirs reactions

Plan to nationalize foundation shares in VakIfbank stirs reactionsA government plan to nationalize the share of foundations in VakIfbankand#39s capital by transferring them to Treasury accounts under Article 7 of a draft bill that will amend a number of laws, including Banking Law No. 5411, has caused controversy.

The move has been identified in media outlets critical of the government as a andldquobomb,andrdquo as such a move would be tantamount to nationalization of the nationand#39s major foundations and trusts. Experts have been cited as saying this draft will likely be legislated in Parliament, and if it passes as is into law, it will possibly be scrapped by the Constitutional Court since, as required by their definition, foundation assets cannot be transferred to the state.

It has been argued that even if the Constitutional Court somehow allows it, the European Court of Human Rights (ECtHR) would rule against such legislation.The bank was established in 1954 under the orders of late Prime Minister Adnan Menderes with the participation of the nationand#39s foundations and trusts, represented by the General Directorate of Foundations (VGM), in a capital contribution structure.

Article 7 of the draft envisages adding new paragraphs to Article 6 of Foundations Law No. 6219.

These changes propose that the VGMand#39s 58.5 percent share in the bank be transferred to the Treasury at an appraisal value determined as an average of evaluations by three different assessment companies.

The Cabinet will oversee the process. Likewise, the government will decide the terms of the payments in return for the transfer of shares.

Bankers have noted that the governmentand#39s real intentions could be to privatize VakIfbank after completing the acquisition of shares.A VGM official speaking to Todayand#39s Zaman on condition of anonymity called the governmentand#39s move to take over the shares of the foundations is andquotunacceptable.

andquot The official said almost a quarter of the land in Turkey is owned by foundations, and these foundations are in constant need of capital to proceed with their services, and that VakIfbank has been working properly as a lender of first resort for them andldquoThe [bankand#39s] initial capital was TL 50 million when it was first founded 60 years ago, and this number has reached TL 10 billion today. So, foundations have about TL 6 billion in capital share with this bank.

Is there any other investment opportunity that promises such a high return?andrdquo he noted.The same official said the governmentand#39s rationale in seizing the foundationsand#39 shares in the bank is related to the reluctance of the sectorand#39s watchdog, the Banking Regulation and Supervision Agency (BDDK), to allow dividends to be distributed.

andldquoIf foundations need money, they may offer 5 percent of their shares and put TL 300 million in their pockets,andrdquo he stated.VakIfbank General Manager Halil AydoIan was asked about his assessment on the issue while at a ceremony in Izmir for the launch of a program that will deliver convenient loans to members of the Izmir Chamber of Commerce (IZTO).

He said he supports andldquothe preference of the political will.andrdquoThe general manager also commented on another article in the draft bill about VakIfbank, which seeks to make it possible for the bank to establish an Islamic lender — or participation bank, as it is called in Turkey — in collaboration with other public banks.

If legislated, everything that this article requires will be carried out, he said.

SOURCE: Today’s Zaman

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