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Turkey’s Halkbank stocks sink following arrest of company executive

By Leyla Amur

Stocks for state-operated Halkbank plunged in its biggest single-day loss on Turkey’s bourse Wednesday following the arrest of the lender’s deputy executive in the US on grounds that he was involved in aiding the evasion of US sanctions against Iran.

Mehmet Hakan Atilla, the detained executive, is accused of collaborating with Iranian-Turkish citizen Reza Zarrab in illegally funneling hundreds of millions of dollars through to US banks from the Iranian government and the private sector.

In March of last year, Zarrab was arrested by US officials at John F. Kennedy International Airport also for illegally circumventing the sanctions. Tape recordings released in relation to a previous corruption probe in Turkey revealed that Zarrab had close ties with Atilla, as well as other Halkbank officials.

Halkbank’s shares slumped as much as 16% early in the day, with the lender’s stock down 14.34% to 10.33 TL, according to data released by Thomson Reuters. Bloomberg reported that this fall could have shaved off as much as 2.2 billion TL, or $600 million, of Halkbank’s market value. By late afternoon, traders had already exchanged 110 million shares, which is the most recorded since the lender publicly listed.

Turkish response

Halkbank, also known as Türkiye Halk Bankasi, and the Turkish government are involved in the investigation of the case.

“Our bank and relevant state bodies are conducting the necessary work on the subject and information will be shared with the public when it is obtained,” Halkbank stated in a company statement.

In a statement Wednesday evening, Nihat Zeybekci, Minister of Economy, criticized the US’ arrest of Atilla, saying it was “rude” and “disrespectful.” He went onto say, “The deputy executive of Halkbank is someone who was able to visit the US, not the representative of an illegal organization.”

Larger industry

In mid-February, Halkbank released its annual results that showed the lender was outpacing its competitors in the Turkish banking industry as it increased its total assets by 23.3% year-on-year at the end of 2016 to 233.4 trillion TL. The lender also reported that the equity of its shareholders increased roughly 10% year-end in 2016, with the bank raking in 2.6 trillion TL in net profit.

Atilla’s arrest also follows recent developments in the Turkish banking sector. Earlier this week, local lenders, such as Akbank and ICBC Turkey, have moved to restructure their finances by issuing syndicated loans valued at $1.2 billion and €421m, respectively. The decision to refinance followed a downgrade in outlook by ratings agency Moody’s on March 20 of 14 Turkish banks, including Halkbank, from stable to negative, citing a declining macroeconomic environment in Turkey and the government’s inability to bail the banks out if needed.

 

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