Eighth update in our series on the Turkish investment fund crisis. Only what is new, and our analysis.
What is new
TMSF has taken control of three banks and two factoring companies. By a banking regulator decision of 30 September, shareholder rights other than dividend rights in the controlling stakes of Tera Yatırım Bankası, Destek Yatırım Bankası and Hedef Yatırım Bankası are now exercised by the Savings Deposit Insurance Fund (TMSF). The owners of Destek Finans Faktoring and Tera Finans Faktoring must sell their stakes within six months to investors who meet the regulator's requirements; TMSF votes those shares in the meantime. This is a transfer of control, not a confiscation of ownership. The three banks account for 0.22% of banking sector assets, the two factoring companies for 1.45% of factoring sector assets.
Seized criminal assets will go into a dedicated fund. The justice ministry has announced that assets found to be criminal proceeds will, through legal process, be transferred into a fund to be created within TMSF. It is the first signal of a channel through which part of the illicit gains could return to the system.
A fifth wave of detentions. As of 1 October the case involves 217 suspects, 56 of them under arrest and 88 under judicial control measures. Trading in 26 stocks is being examined, along with accounts that earned abnormal returns in a short period. According to judicial sources, the former chairman of the capital markets regulator, who led it from 2022 to May 2026, has been summoned for questioning as a suspect.
Tighter rules are being prepared. From Monday, the banking and capital markets regulators begin work on changes: graduated limits on funds buying and selling equities, new oversight mechanisms, a review of the regulators' powers, the creation of a Risk Centre, specific rules for equity-heavy funds and revised cut-off times for fund orders.
September was the exchange's worst month since 2008. The market value of all BIST companies fell by about 4.5 trillion lira over the month, 22.5% in dollar terms (around 96 billion dollars), the sharpest drop since August 2018. BIST 100 lost about 16% and fell intraday to 11,926, its lowest since January. Market participants report brokers facing equity shortfalls as clients failed to meet margin calls.
One manager offers to pay out in two days. A management company whose liquidating fund holds 1.2 billion lira (about 1 billion in cash, the rest in liquid BIST 30 shares) has offered to complete its liquidation within two business days, if the Coordination Board allows it.
Our analysis
The banking perimeter is affected, depositors are not. A TMSF takeover sounds alarming, but two facts matter. First, these are investment banks, which in Türkiye do not accept retail deposits, so there is no question of deposit safety here. Second, they account for 0.22% of sector assets combined. This is the ring-fencing of entities linked to the case, not a sign of weakness in the banking system. Our conclusion since the start of the crisis stands: deposits at major Turkish banks are outside the risk zone.
The risk has shifted to counterparties. For companies dealing with these banks and factoring firms (receivables, factoring agreements, credit lines, guarantees), the relationships do not disappear, but their terms are now set by new management. If you have receivables assigned to one of the listed factoring companies, or a loan at one of the banks, it is worth clarifying in advance who now makes decisions and how existing contracts will be performed.
A fund of seized assets is a hope, not a plan. Moving criminal assets into a TMSF fund requires court confiscation rulings, which take years. The mechanism for distributing funds to investors has not been defined. For liquidity planning, we still rely only on the realisation of the funds' own assets.
Two-speed recovery is becoming more visible. One manager's readiness to close its liquidation in two days with 80% of the portfolio in cash shows once again how differently holders of different funds will fare. What matters is not that a fund is on the liquidation list, but what it holds.
The new rules will change the fund market for the long term. Limits on funds' equity trading and revised rules for equity-heavy funds will make Turkish funds markedly more conservative. For investors, that means less abnormal return, and less risk of paying for it.
What to do now
Companies: check whether you have contracts, receivables or loans with the banks and factoring companies placed under TMSF control, and clarify how they will be performed.
Holders of frozen units: keep tracking your entitlement reconciliation and your fund's announcements.
Depositors at major Turkish banks: there is no reason to act.
Dealing with affected entities, or holding frozen units? Contact us.