Management of Turkey’s three top state-run banks is now under the control of politicians and bureaucrats, including advisers to President Recep Tayyip Erdoğan, company data shows.
Career bankers sitting on the nine-member executive boards of Halkbank, Ziraat Bank and Vakıfbank are in the minority by as much as six to three, according to information collated by Ahval.
Veysi Kaynak, a former deputy prime minister of the governing Justice and Development Party (AKP) serves as deputy chairman of Ziraat Bank, the largest public bank. Faruk Çelik, who was minister of agriculture between 2015 and 2017, is also a director, along with two other former AKP politicians and two bureaucrats, leaving three career bankers on its board, according to the company’s website.
Turkey’s government has sought to use state-run banks to boost lending to the economy during the COVID-19 pandemic and in the aftermath of a currency crisis in 2018, when they dished out loans at below-market rates. The three banks operate under the umbrella of the country’s sovereign wealth fund, which President Recep Tayyip Erdoğan created in 2016 and has chaired since September 2018.
Meltem Taylan Aydın, a chief adviser to Erdoğan, is a board member of Halkbank, along with Maksut Serim, another presidential adviser, Ebubekir Şahin, a former deputy head of state-run news agency Anadolu, and ex-Istanbul mayor Mevlüt Uysal. Himmet Karadağ, a former adviser to the finance minister, is its deputy chairman. Three career bankers sit on the nine-member board.
Vakıfbank was brought under the control of the sovereign wealth fund in May last year. Cemil Ertem, another chief adviser to Erdoğan, became its deputy chairman a month later. Other directors include ex-interior minister Abdülkadir Aksu, hired in May 2019, and former AKP parliamentarians Dilek Yüksel and Sadık Yakut.
Profit at state-run banks slumped in the first quarter of 2021 as the government pressured them to lend. Earnings declined at a faster pace than the sector average as they charged lower interest rates on loans than their rivals and sought to increase capital for lending by paying higher interest rates on deposits.
Halkbank, whose loan book has expanded by 37.6 percent over the past year, saw the biggest drop in profit in the three months to March. Earnings fell by an annual 93.5 percent to 73.5 million liras ($8.81 million). Interest payments surged by 141 percent to 15.4 billion liras, outpacing earnings from interest, which rose by 29.6 percent to 15.5 billion liras.
Turkey’s main opposition political parties have strongly opposed the establishment of the sovereign wealth fund and its control of state-run companies, saying Erdoğan has robbed parliament and other institutions of oversight. Turkish Airlines and Turkey’s largest telecommunications firms are among other entities under its control.