January 20, 2016 / 4:31 PM / 3 years ago

UPDATE 1-Erdogan aide calls for nationalisation of Turkey's Isbank

(Updates with comment from Isbank, share price to close)

ISTANBUL, Jan 20 (Reuters) - An aide to Turkish President Tayyip Erdogan has called for the nationalisation of the country’s biggest private bank, Isbank, in which the main opposition Republican People’s Party (CHP) has a 28 percent stake.

The aide, Yigit Bulut, spoke after lawyers for Erdogan this week filed a lawsuit against CHP leader Kemal Kilicdaroglu for describing the president as a “tin-pot dictator” in a speech.

“I am speaking very clearly, a (political) party cannot have a bank. Necessary legislation should be enacted urgently and this bank should be turned into a state bank,” Bulut said in a TV programme broadcast on state-run TRT Haber late on Tuesday.

“That bank belongs to the state, the people. A party cannot have an organic link to a bank. After that speech, after those insults to the president, state, people and religious community, that bank should urgently be returned to the people.”

Kilicdaroglu described Erdogan as a dictator over the president’s intolerance of a petition signed by academics criticising military action against Kurdish militants in the southeast and calling for an end to curfews in the region.

In a statement, Isbank said that “incorrect news and assessments” on its activities had been reported on websites and social media, adding that its activities were in compliance with banking laws and regulations.

“There is no contrary assessment and development with respect to our bank’s activities,” it said, although it did not directly address Bulut’s comments. Isbank said it was taking legal actions against “incorrect news releases”, without giving further details.

Isbank shares finished down 4 percent at 4.35 lira, underperforming the main Istanbul share index, which dropped 2 percent.

Last May Turkish authorities took over Bank Asya, set up by followers of U.S.-based Islamic preacher Fethullah Gulen, an ally-turned-foe of Erdogan.

The CHP inherited a 28.09 percent stake in Isbank from the founder of the Turkish Republic, Mustafa Kemal Ataturk, whose will stipulates that dividends go to the Turkish Language Association and Turkish History Association.

A foundation constituted by the bank’s employees holds a 40.15 percent stake in the bank, and the remaining 31.76 percent is listed on the Istanbul stock exchange.

Last February, a Twitter whistleblower who tweets under the pseudonym Fuat Avni said Erdogan had ordered Turkey’s banking watchdog to take over Isbank. The bank dismissed those reports. (Writing by Asli Kandemir and David Dolan; Editing by Daren Butler/Nick Tattersall and Mark Heinrich)

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