Turkey's banking watchdog bailed out Friday, October 27, two troubled private banks on the grounds that they were no longer able to fulfil their financial obligations.
The newly-established board of banking regulation and control said in a statement that the middle-ranking Etibank and Bank Kapital, owned by two well-known buisiness groups, "had failed to take the required measures despite warnings from the related authorities."
The two banks' arrears had exceeded the amount of their capitals, the statement said, adding that "their continued activities would have put at risk the rights of account-holders and the stability of the financial system."
The board, a body independent from the government, said control of all assets of the banks was transferred to a central bank fund, which has taken over the management of eight other ailing banks since last year.
The board called on account-holders not to panic, assuring that the banks would continue to function normally and fulfil all their obligations.
"With this decision, the structure of the banking system has become healthier," the statement said.
"There is no doubt that the required legal action will be taken against those who disobeyed law," it added.
Turkey, a candidate for European Union membership, has tightened control over its corruption-ravaged banking sector since last December when the parliament passed a law aiming to catch up with international banking standards and install a strict monitoring mechanism.
The banking reform is a key element of a comprehensive economic program that Turkey launched last December under a $4 billion, three-year loan deal with the International Monetary Fund to put its economy in order.— (AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com )