October 22, 2019 / 10:29 AM / a month ago

EBRD opposes Turkey naming former jailed Halkbank executive as CEO of bourse

ANKARA/ISTANBUL (Reuters) - The European Bank for Reconstruction and Development opposes the Turkish government’s decision to name Hakan Atilla, a former Halkbank executive who was jailed in the United States, as chief executive of the Istanbul bourse in which it has a big stake.

Mehmet Hakan Atilla, an executive from state-controlled Halkbank, is seen with Turkish Treasury and Finance Minister Berat Albayrak as he talks on a mobile phone at Istanbul International Airport in Istanbul, Turkey, July 24, 2019. Mehmet Acar/Finance Ministry/Handout via REUTERS/File Photo

An official said the EBRD would press the matter with Turkish authorities, while others told Reuters it was one of several disagreements the bank has with Turkey, which is facing growing international criticism over its military incursion in Syria.

Atilla was sentenced in 2018 to 32 months in a U.S. prison following his conviction for helping Iran evade U.S. sanctions. At the time, Turkish President Tayyip Erdogan condemned the case as a political attack on his government.

Atilla was released and returned to Turkey in July, and on Monday Finance Minister Berat Albayrak, Erdogan’s son-in-law, named him CEO of the exchange.

“We were not consulted and we do not support it,” the EBRD’s managing director for communications Jonathan Charles told Reuters. “We will discuss the matter with authorities.”

The EBRD has a 10% stake in Borsa Istanbul, its second-largest holder, and has pressed for years for it to do an initial public offering with little traction. Last year the exchange was the 15th largest in Europe, the Middle East and Africa.

Halkbank, Turkey’s second-largest state bank, has not fallen off the U.S. radar despite Atilla’s return home. Last week U.S. prosecutors charged it with taking part in a multibillion-dollar scheme to evade sanctions on Iran.

Halkbank dismissed the charges as part of broader U.S. sanctions over Turkey’s two-week old offensive against Kurdish-led forces in northeast Syria, while Erdogan has called them an “unlawful, ugly” step.

A spokesperson for the Treasury was not available to comment on the EBRD’s opposition.

“It is a fact that we have been experiencing some problems in certain issues with EBRD,” said a Turkish official. “I think we can overcome these.”

But a person close to the EBRD, who also requested anonymity, said Ankara and the bank “have had issues realising projects, keeping promises made and in appointments such as this one for a couple of years”.

Naming Atilla CEO “is actually highlighting the issues that have accumulated,” the person said. “I do not know how much this will affect the EBRD’s work in Turkey but it seems like the problem is growing.”

A former Halkbank deputy general manager, Atilla was listed on Tuesday on the bourse's website here as CEO, member, and acting chairperson.

“The EBRD clearly expressed its objection,” said a separate person with knowledge of the matter.

“The EBRD member on the board did not agree with this appointment,” the person said, adding that the EBRD’s opposition did not create a legal obstacle.

Borsa Istanbul’s 378 listings had a domestic market capitalization of $149.3 billion last year, while its net profit, at 993 million lira ($170 million), was up 225% from 2018.

Additional reporting by Can Sezer in Istanbul; Editing by Gareth Jones

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