DEMIRBANK UNDER STATE CONTROL
On December 5 the international ratings agency Standard Poor's revised to stable from positive the outlook on seven Turkish banks. It also downgraded the credit and certificate deposit ratings of Demirbank T.A.S. on CreditWatch with negative implications.
The recent concerns over Turkish bank debt spurred a liquidity crisis and stock market problems in the country. The Central Bank of Turkey, aiming at satisfying IMF conditions, stopped providing extra funding to handle the liquidity crunch. The agency also added that Demirbank T.A.S. ratings may be downgraded since the bank is particularly vulnerable to the liquidity crisis as a result of its heavy reliance on short-term funding.
On the next day, December 6 the troubled Demirbank was put under the control of the Deposit Insurance Fund, thus raising the total number of troubled banks under administration to 11. Demirbank was Turkey's ninth biggest bank in terms of assets. Engin Akcakoca is the new Chairman and General Manager of Demirbank T.A.S., appointed by the Banking Supervisory Board. Mr. Akcakoca has worked at T.Is Bankasi, Ctitbank and American Express Bank before his last position as General Manager of Kocbank
In March 1999 Demirbank received a licence for operation in Bulgaria and opened its branch a month later. 99.9% of Demirbank (Bulgaria) are owned by Demirbank T.A.S. (Turkey). The management of the Bulgarian branch is convinced that the bank's takeover by the Deposit Insurance Fund in Turkey will not affect the activity of the subsidiary in any aspect.
The Bulgarian National Bank informed in its press release that Demirbank (Bulgaria) will continue its normal activity in the country.