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Turkish Bank Stocks Decline After Depository Rule Is Removed

Tugce Ozsoy
Turkish Bank Stocks Decline After Depository Rule Is Removed

(Bloomberg) -- Turkish banking stocks fell Monday after market regulators wound back some of the measures imposed last week to shield the sector from fallout as U.S. prosecutors brought an indictment against Halkbank in New York.

The Borsa Istanbul Banks Index, which tracks 13 listed lenders, slid as much as 2.4%, before trading 1.9% lower as of 4:15 p.m. in Istanbul. Akbank TAS and Turkiye Garanti Bankasi AS led the slump as all but two members of the sector benchmark declined. Halkbank sank 3%.

Turkey’s Capital Markets Board removed a depositary restriction that limited sales of shares in the seven largest banks to stocks in the possession of investors, and a requirement that sales could only be executed by the brokerage holding the stock. While the regulator retained a ban on short selling, the relaxations prompted selling by investors prevented from making disposals earlier.

“Because of last week’s rules, some clients’ orders to sell bank shares weren’t executed,” said Burak Demircioglu, head of international capital markets at Yatirim Finansman in Istanbul. “With the relaxation of the rules, some of those sell orders are being processed.”

The Borsa Istanbul and the Capital Markets Board introduced the measures after the U.S. on Oct. 15 targeted Turkiye Halk Bankasi AS, to give the lender its full name, over alleged breaches of Iran sanctions, six days after Turkey began a military incursion into Syria. While the measures supported bank stocks, with the index advancing 7.3% by Friday’s close, they also had the effect of slashing trading volume by more than 70% of the 20-day average.

Read the latest here on Turkey’s Syria incursion

(Updates prices throughout. A previous version of this story was corrected to remove a reference to the largest banks by market capitalization.)

To contact the reporter on this story: Tugce Ozsoy in Istanbul at tozsoy1@bloomberg.net

To contact the editors responsible for this story: Blaise Robinson at brobinson58@bloomberg.net, ;Onur Ant at oant@bloomberg.net, John Viljoen, Paul Jarvis

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