Turkish Regulator Appoints Banks to Liquidate $18 Billion in Investment Funds

ANKARA, Sept. 18 (AP) — Turkey's Capital Markets Board (SPK) has appointed two state-owned lenders to liquidate 131 investment funds with a combined value exceeding $18 billion, marking the largest forced asset disposal in the country's financial history. The regulator announced the decision on Thursday following the suspension of trading in the funds earlier this month.

The SPK designated Isbank and Ziraat Bank as the official liquidators for the portfolio, which includes a diverse range of equity, bond, and mixed-asset vehicles. The move comes after the board suspended trading to prevent further volatility and protect investor interests amid concerns over liquidity and valuation discrepancies within the funds.

The 131 funds represent a significant portion of Turkey's managed assets, with holdings spread across domestic equities, government bonds, and foreign securities. The liquidation process will involve the orderly sale of these assets to repay investors, though the timeline for full distribution remains uncertain. The SPK stated that the appointment of Isbank and Ziraat Bank ensures that the process is managed by institutions with sufficient capital and operational capacity to handle the scale of the operation.

Regulators have not disclosed specific details regarding the reasons for the suspension beyond general references to market stability and compliance issues. However, the timing of the action follows a period of heightened scrutiny on fund management practices in Turkey's capital markets. The SPK emphasized that the liquidation is intended to restore confidence in the sector and ensure fair treatment for all stakeholders.

Investors in the affected funds have been notified of the suspension and are awaiting further instructions regarding the liquidation schedule. The two appointed banks will work closely with the SPK to assess the current value of assets, settle outstanding obligations, and distribute proceeds according to legal priorities. Financial analysts note that the sheer size of the liquidation could impact market liquidity in the short term, particularly in sectors heavily represented within the funds.

The Turkish government has not yet commented on whether additional regulatory measures will follow this action. Questions remain regarding the potential impact on other investment vehicles and whether similar suspensions might occur elsewhere in the market. The SPK indicated that it would provide updates as the liquidation process advances, but no specific timeline for completion has been set.

As the liquidation begins, market participants are closely watching how the sale of assets will unfold and what implications it may hold for Turkey's broader financial landscape. The outcome of this unprecedented operation could serve as a precedent for future regulatory interventions in the country's capital markets.