Fitch says impact of Bank Asya takeover limited, but warns negative effect on investor sentiments

International credit rating agency Fitch has said Turkey's banking sector will not be significantly affected by the takeover of Bank Asya. The agency, however, warned of the takeover's potential negative impacts on investor sentiments towards Turkey and the perceived independence of the country's banking watchdog. 

"The Turkish banking sector as a whole, and its participation [Islamic] banks in particular, should not be significantly affected by the transfer last Friday [May 31] of Bank Asya's control to the Savings Deposit Insurance Fund," the agency said in a statement June 3.

The agency pointed out that Bank Asya was a relatively small part of the overall Turkish banking system, with a market share of around 1 percent, adding, "But the bank was the largest participation bank before the onset of its problems in 2014."

Fitch said Turkey's banking sector is generally well -managed, with the Banking Regulation and Supervision Authority (BDDK) being a reasonably strong regulator.

"But the BDDK's intervention in Bank Asya could be perceived to have resulted from a political agenda towards the bank and the events surrounding the bank could have a moderately negative impact on investor sentiment towards Turkey and the perceived independence of the BDDK," it added. 

The watchdog introduced restrictive measures regarding Bank Asya in September 2014, and took over management of the bank in February 2015.