TURKISH GOVERNMENT VIEWS ON BANK MELLI AND BANK

S E C R E T ANKARA 002777 SIPDIS SIPDIS ISN FOR KEVIN MCGEEHAN AND ANTHONY RUGGIERO, T, TREASURY, EUR, NEA E.O. 12958: DECL: 11/07/2017 TAGS: KNNP MNUC TU PREL IR PARM EFIN SUBJECT: TURKISH GOVERNMENT VIEWS ON BANK MELLI AND BANK MELLAT REF: A. A) SECSTATE 153725 ¶B. B) SECSTATE 148605 Classified By: Economic Counselor Dale Eppler for reasons 1.4(b) and (d) ¶1. (U) This is an action cable. Post requests guidance on related item outlined in paragraph 4. ¶2. (S) Per Reftel A, we informed leaders at the Ministry of Foreign Affairs (MFA),Banking Regulation and Supervision Agency (BRSA),and MASAK, the Turkish financial intelligence unit, of Bank Melli's desire to purchase a bank in Turkey. Sakir Torunlar, Deputy Director General of the MFA's Security Affairs Section, "listened with interest" and agreed to share the information with appropriate parties in the GOT. Tevfik Bilgin, Chairman of BRSA, informed us that two months ago, a group of business leaders came from Iran to assess banks in Turkey. The group was accompanied by the Iranian Ambassador to Turkey and a representative from the Iranian Bankers Association. They did not state any affiliation with Bank Melli. ¶3. (S) Bilgin noted that to date, no Iranian entity has made a purchase offer on a Turkish bank, and he did not know the name of any possible target bank. BRSA would have the final say on approval of a bank acquisition in Turkey. Bilgin notes that Bank Mellat currently operates a legally chartered bank in Turkey. If Iran wished to undertake additional banking activities in Turkey, they could simply expand Bank Mellat's activities. ¶4. (S) Per Reftel B, Bilgin noted that Bank Mellat is operating legally in Turkey and is following all its charter obligations. He questioned what the USG is asking the GOT to do in terms of designating Bank Mellat as the USG did under E.O. 13224 "Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism." Bilgin said this was a unilateral decision of the USG, and asked for further guidance on desired actions by the GOT. Based on the information in Reftel B, Bilgin said the GOT does not have authority to take this kind of designation action (absent specific evidence of illegal activity by Bank Mellat in Turkey). Bilgin said the GOT wants to be responsive, but the fast-growing Turkish economy is always in need of additional capital for growth. We gave Bilgin the Fact Sheet provided in Reftel B, which was used as the legal basis for our decision to designate Mellat, but Bilgin felt this was not sufficient evidence for the GOT to take its own executive action against Mellat. Post would appreciate Department's guidance on any further information or evidence releasable to the Government of Turkey, regarding Bank Mellat's Turkey branches, and specific interactions with sanctioned companies or entities, that would assist the GOT in considering actions against Bank Mellat. ¶5. (S) Genc Osman Yarasli, President of MASAK, had no knowledge of a planned purchase by Bank Melli. MASAK would also be involved in the due diligence process of a bank purchase, although BRSA would have the final approval. All three interlocutors agreed to be in touch with post on details related to the purchase outlined in Reftel A. Visit Ankara's Classified Web Site at http://www.state.sgov.gov/p/eur/ankara/ WILSON