Ankara:Trkiye will not allocate Treasury resources to cover losses at investment funds facing liquidation, Vice President Cevdet Yilmaz announced. Instead, repayments will be managed using the funds’ assets and any recovered proceeds.
According to Anadolu Agency, Yilmaz addressed the parliament as the chair of the Fund Coordination Board, noting that 131 funds under liquidation account for 4.6% of all funds and 7.7% of their combined portfolio value. He emphasized that while the issue affects a limited segment of the fund market, it remains significant.
The affected funds' portfolio value was 2.4% of household financial assets as of October 5. Yilmaz assured that the financial system is not at systemic risk, despite the limited scope of the problem.
Yilmaz explained that repayments would follow a legal principle of distributing available resources proportionately to investors’ holdings. Special provisions are in place for extraordinary liquidation cases, with interim principal repayments of up to 1 million Turkish liras planned, focusing on small investors and money market funds.
Existing fund assets will be utilized first, along with resources recovered from those who gained excessively or unjustly and proceeds from asset sales. Yilmaz reiterated that Treasury resources would not be used for private losses during this process, emphasizing that investment funds, especially high-risk hedge funds, do not have the state guarantee present in the banking system.
Judicial and administrative investigations are underway, with authorities holding accountable those who profited unlawfully through speculation and manipulation. The State Supervisory Council has assigned 10 inspectors to examine the responsibilities of the relevant institutions and regulators.
Authorities are considering administrative and legal measures to prevent future issues. The coordination board has developed a roadmap, and institutions are taking actions within their mandates. Yilmaz promised a transparent, fair, and speedy liquidation process, reaffirming Trkiye’s dedication to expanding and strengthening its capital markets.