The European Bank for Reconstruction and Development (EBRD) will sell its 10 percent stake in the İstanbul exchange after a former Halkbank executive who was jailed in the United States was named as the bourse’s CEO, two people familiar with the plans said.
The EBRD has told Turkish authorities of its decision to sell as soon as possible, the two sources told Reuters on Wednesday.
A sale would see Borsa İstanbul’s only major foreign owner depart just as Turkey’s relations with the West are strained by its military incursion into northeastern Syria, which drew international condemnation this month.
The EBRD declined to comment. Borsa İstanbul was not immediately available to comment.
Last week Reuters reported that the EBRD opposed Ankara’s decision to name Hakan Atilla, the former deputy general manager at state-owned Halkbank, as chief executive of the exchange operator.
The sources, who requested anonymity, said the appointment was the latest concern the EBRD has had with the direction of the bourse and convinced it to sell its stake, the second-biggest behind that of Turkey’s sovereign wealth fund.
“The EBRD informed the Turkish authorities that, because of Hakan Atilla, it will sell its entire 10 percent stake as soon as possible,” one of the sources said.
Atilla was sentenced in 2018 to 32 months in a US prison following his conviction for helping Iran evade US sanctions. At the time, Turkish President Recep Tayyip Erdoğan condemned the case as a political attack on his government.
Atilla was released and returned to Turkey in July, and last week Finance Minister Berat Albayrak, Erdoğan’s son-in-law, named him CEO of the exchange.
The appointment came days after US federal prosecutors charged Halkbank with taking part in a multi-billion-dollar scheme to evade US sanctions on Iran. The state-owned lender said the charges were an extension of US sanctions over the Syria incursion.
After Atilla’s appointment, the EBRD’s managing director for communications, Jonathan Charles, said the EBRD was not consulted on the move, would press the matter with authorities, and “has the right to exit its investment.”
The EBRD has for years urged Borsa İstanbul to do an initial public offering (IPO) with little traction. Last year the exchange, which has 378 listed companies, was the 15th largest in Europe, the Middle East and Africa.
A person close to the EBRD said last week there was a risk the Atilla disagreement could affect the bank’s other investments in Turkey.
The EBRD says it invested 11.5 billion euros ($12.8 billion) in 300 projects in the country in the last decade. Albayrak spoke at the bank’s 10-year anniversary event in Istanbul last month.
Under an agreement that was last amended in November 2018, the EBRD can sell its bourse stake at the purchase price pending an IPO. Turkey’s wealth fund, which has a 80.6 percent stake, would be the likely buyer, according to an annual financial report.