Turkish Wealth Fund to inject USD3 bn capital to state banks

Turkey’s sovereign wealth fund said on Monday that it launched works on increasing three state banks’ core capital by a total of 21 billion lira ($2.97 billion) to support capital structure and adequacy.

The Turkey Wealth Fund, which owns country’s largest state-run banks Ziraat Bank and a majority stake in the second largest state bank Halkbank, will acquire a holding in Vakifbank (the country’s third-largest state-owned bank) as a result of the capital injection, the fund also said.

Last December, Turkey’s Treasury had acquired a controlling stake in Vakıfbank, from the General Directorate of Foundations, as per a presidential decree issued by President Erdoğan.

The bank’s A and B group shares owned by the directorate, comprised a 58.5 percent stake worth almost $2.5 billion was transferred to the Treasury within a week following the December 4, 2019 decree.

The transfer of Vakıfbank to the Treasury was then expected to precede its acquisition by the Turkey Wealth Fund which is chaired by Erdoğan. The TWF was established by the president in 2016 and is made up of Turkey’s largest state enterprises.

About a quarter of Vakıfbank’s shares are traded on the Istanbul Stock Exchange. Reuters reported last week Turkey’s plans to inject about 20 billion lira of new capital to state banks. ($1 = 7.0750 liras)