​Some Turkish banks are under U.S. Treasury investigation

TURKEY - In Brief 23 Oct 2017 by Atilla Yesilada

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Turkish markets made a poor start to the week, partly driven by Dollar Index strength, but definitely demoralized by the ongoing controversy over potential fines by the U. S. Department of Treasury to be levied on six Turkish banks. In particular the severe plunge in the banking index of the Istanbul Stock Exchange can’t be explained by other factors. I’ve spent most of Monday talking to financial press corps, banking analysts and bankers to find out whether the story is true. It is part-true. But the truth is sufficient to dim my short-term optimism on TL denominated assets. All the sources I’ve contacted verified that some type of probe or inquiry had been launched as early as 2013 or 2104 by the Treasury Department in response to Turkey’s ignorance of American sanctions on Iran. My sources mention 4-7 banks, which I shall not name because of my fear of impugning good reputations. The inquiry is probably not related to the ongoing case of gold trader Mr. Reza Zarrab. My contact in the press told me that as hard as his institution pressed, it could not find any documents sent to Turkish banks or to Turkish authorities regarding a legal case launched in the U.S. There are several theories as to why this rather old story was suddenly rehashed: Washington wants to use it as leverage to resolve the visa crisis to its advantage, i.e. to secure the release of consular employees Mr. Metin Topuz and an unnamed second person.White House has launched an attack on Erdogan. The visa ban was the first step. The leaking of the Treasury probe is the second. More embarrassing revelations will follow. The probe has reached a critical stage. Some Turkish banks might soon be informed of...