Turkey’s state-run Ziraat Bank said on Thursday that chief executive Hüseyin Aydın would step down, raising speculation that the top manager may be awarded a senior position in government.
Aydın, who is also head of the Banks Association of Turkey (TBB), is known for his close relations with Turkish President Recep Tayyip Erdoğan.
“Hüseyin Aydın will transfer his duty, resignation is not on the table,” Ziraat Bank said in a statement without providing further details.
Aydın was appointed as CEO of Ziraat Bank in July 2011. He is expected to be replaced by deputy CEO Alpaslan Çakar, Reuters reported citing a banking source.
Aydın may be awarded the position of treasury and finance minister in a cabinet reshuffle expected to be announced by Erdoğan, journalists and economists including Barış Yarkadaş, a former deputy of the main opposition Republican People’s Party (CHP), and economist Selçuk Geçer said.
Ziraat Bank, Turkey’s biggest state-run bank, has been involved in unorthodox financial transactions under Aydın’s management and Erdoğan may want to keep the former CEO close.
The bank, along with the state-run Halk Bank, has become a key source of unconventional funding for the government in recent years, according to Aykan Erdemir, the Turkey Program director at the Foundation for Defense of Democracies.
Erdoğan “appears to have used public funds, courts, and questionable financial transactions to further consolidate economic and political power”, he said.
“In 2019 audits by the Turkish Court of Accounts revealed that the country’s two biggest public lenders, Ziraat Bank and Halkbank, provided large conglomerates with significant loans that have since become nonperforming”, Erdemir said.
The loans were controversial because the primary mandate of state-owned Ziraat Bank was to extend credit to farmers, while the primary mandate of Halkbank was to extend credit to small- and medium-sized enterprises, Erdemir said.
The government-owned Turkey Wealth Fund (TWF) used a Ziraat loan to gain control of Turkcell’s board through Çukurova Holding. The TWF fully owns Ziraat Bank and is Turkcell’s largest shareholder, with 26.2 percent of its shares. Aydın, who approved the 2014 loan, has sat on the boards of both Turkcell and TWF.
Erdemir argued that “Ziraat Bank has become a key instrument not only of Erdoğan’s power consolidation at home, but also of his international ambitions. Yet, The U.S. Treasury Department and U.S. regulators and courts forced Erdoğan to curb Ziraat Bank’s footprint abroad. Erdoğan currently uses the bank to serve his domestic agenda”.
In 2017, Ziraat Bank became one of the two Turkish public lenders fingered by Reza Zarrab, the Turkey-based architect of the sanctions-busting scheme who pleaded guilty and flipped to be a government witness against Mehmet Hakan Atilla, a deputy CEO of Halkbank, who served 32 months in a U.S. prison before being released in July 2019.
Zarrab said in November 2017 that Turkey’s then-economy minister told him that Ziraat Bank was one of the Turkish banks Erdoğan used to move funds for Iran.