Türkiye will first seek refunds from people and companies who made real gains of 10 million lira or more from the investment funds at the centre of this autumn’s market turmoil, Treasury and Finance Minister Mehmet Şimşek said on Oct. 20.
Speaking in a joint broadcast by BloombergHT and HaberTürk, reported by Anadolu Agency and Hürriyet’s Bigpara, Şimşek said an algorithm developed with the Savings Deposit Insurance Fund (TMSF), the Justice Ministry and the Central Registry Agency (MKK) had identified those who profited at every stage, from the creation of the funds to their liquidation. The lists have been passed to TMSF and the Justice Ministry.
How the clawback will work
TMSF has opened 132 accounts: one for each of the 131 funds being wound up and a general refund account. Money will come from voluntary repayments and from gains above inflation and the 10-million-lira threshold, with the calculation adjusted for producer and consumer prices. Several hundred companies and individuals will be invited to return gains, Şimşek said, adding that they may have been involved in market manipulation. Those who refuse will face legal proceedings, and the personal assets of fund managers, partners and those acting with them may also be pursued.
Where the liquidation stands
The 131 funds belong to seven portfolio management companies. Şimşek said 66 have been fully liquidated and three of the companies have completed the process, with 40.8 billion lira paid to 45,747 accounts, figures in line with those released earlier by the fund board.
Investors in money market funds at those three firms received an average extra return of 1.43% since Sept. 17, while equity-heavy funds paid out about 58% of their portfolio value as of that date. Şimşek blamed the shortfall on falling share prices that he said had been inflated. Tera, Pusula and Atlas are in extraordinary liquidation; Atlas’s owners have signalled willingness to return some assets, he said.
Once a bill now before parliament is passed, small investors and money market fund holders will receive interim payments of up to 1 million lira first, which Şimşek said could settle about 390,000 accounts. Investors’ remaining claims are preserved.
Wider market impact
Şimşek said net fund outflows since early September totalled 647 billion lira, including 287 billion lira from foreign investors, but had largely stopped. Lira deposits rose 685 billion lira over the same period, taking the lira’s share of deposits to 62%, a point also made by central bank governor Fatih Karahan. Banks’ direct exposure to the troubled funds was 1.3 billion lira against about 56 trillion lira in banking assets, he said.
The minister ruled out using public money to bail out the sector and said penalties for manipulation and insider trading would be toughened, with several hundred tax inspectors possibly moved to regulators. The turmoil has weighed on Turkish stocks, with the BIST 100 falling 4.44% in a week after index provider MSCI froze changes to Türkiye’s weightings. Foreign residents holding lira savings can find wider context in our cost of living guide.
Sources
- Hazine ve Maliye Bakanı Şimşek: 131 fonun 66’sı tamamen tasfiye edildi (Anadolu Ajansı)
- Fahiş kazancın iadesinde alt sınır 10 milyon TL… ‘Vurgun yapanların listesi elimizde’ (Bigpara)
Photo: Central Bank of the Republic of Turkey / Public domain, via Wikimedia Commons
