Turkish authorities have taken over the Islamic lender Bank Asya, which had been embroiled in a long-running political battle.
The move that comes a week before the country’s parliamentary elections was announced by the country’s banking watchdog, Banking Regulation and Supervision Agency (BRSA)and brings to an end a political conflict between president Tayyip Erdogan and the US-based muslim cleric Fethullah Gulen whose followers were responsible for setting up the bank.
BRSA said in a statement: "It has been determined that problems experienced in the bank’s financial structure, partnership and management makeup, as well as issues in its operations, present a threat the confidence and stability of the financial system."
The watchdog had already taken over the bank’s management saying it failed to meet legal criteria.
The bank will now be completely under the state-run Turkey’s Savings Deposit Insurance Fund (TMSF) that reports directly to the prime minister and is responsible for handling struggling banks. TMSF said that currently the bank’s operating licence had not been cancelled.
BRSA said that the decision was aimed at protecting financial stability of the institution which was established in 1996 and is the sixth private finance house of Turkey.
The bank, meanwhile said that its operations will not be affected by the regulatory takeover.