ERGIN – Arab bankers express concern over Asya intervention

Arab bankers express concern over Asya interventionA government intervention into a leading Turkish Islamic bank is a bad reflection on the countryand#39s banking sector, which has seen stable growth over the past decade, and the current uncertainty regarding Bank Asya needs to be addressed as quickly as possible, senior Arab bankers told Todayand#39s Zaman on Thursday.Bankers from Arab countries met with their Turkish counterparts on the sidelines of the 5th Arab-Turkish Economic Dialogue summit in Istanbul on Thursday, seeking an explanation regarding the current depreciation in the lira along with uncertainties in Turkish finance markets due to the government takeover of Bank AsyaBanks from the Gulf region have been jockeying for a slice of the growing financial sector in Turkey over the past decade.

Islamic banks have grown faster than conventional lenders in the same period, but Turkey has to overcome current political tension at home, banking experts warn. Islamic banks hold a combined 57 percent of total banking assets in Turkey and there is still plenty of room for this banking segment to grow in Turkey.

An Arab banking expert told Todayand#39s Zaman on condition of anonymity that finance investors from Arab countries react relatively faster to such negativities as Bank Asya than their European counterparts, who wait and see developments in the medium term andldquoWith such interventions in the finance sector, and the lira losing value, it will be harder to convince bankers from the Arab world to park their cash in Turkey than in the past few years. andhellip This is not a good thing for Turkey, a country that needs hot money more than before,andrdquo the expert said.

Adnan A Youssef, member of the board of directors at the Union of Arab Banks (UAB), told Todayand#39s Zaman in Istanbul on Thursday that the intervention in Bank Asya is andldquoan unfortunate developmentandrdquo and should be resolved quickly. Former UAB President Youssef said, andquotSuch things unfortunately happened in Turkey and other countries in the past and we are concerned that it reflects badly on the Turkish finance sectorandrdquoYoussef said they discussed the issue among his Arab counterparts and are expecting the issue to be solved as soon as possible.

andquotThis cannot remain open-ended like this. We know Bank Asya as a healthy-running Islamic lender that has been running for a long time in Turkey.

andhellip I hope our Turkish friends will manage this well,andquot he told Todayand#39s Zaman.Ratings agency Standard Poorand#39s warned on Wednesday that regulatory actions against Islamic lender Bank Asya illustrated the andquotpotential for political risk, or the perception of it, to directly or indirectly spill over into the financial systemandquotTurkish banking regulators on Wednesday seized a small stake in Bank Asya over an alleged illegal share sale.

The owner of the shares, Kaynak Holding, denied the allegations and said it will take legal action against the decision on Wednesday.

SOURCE: Today’s Zaman