Several managers removed at Turkey's embattled central bank -sources

by Reuters
Thursday, 12 June 2014 08:14 GMT

(Adds more detail on dismissals, analyst comment)

ISTANBUL, June 12 (Reuters) - Several mid-tier managers at Turkey's central bank have been removed, including two general managers and a private secretary to governor Erdem Basci, sources familiar with the matter said late on Wednesday.

The sources gave no reason for the dismissals, nor did they say who had ordered them. The central bank itself declined to comment.

Prime Minister Tayyip Erdogan has frequently accused the bank of doing too little to reduce borrowing costs.

However, the dismissed include the general manager in charge of foreign relations and his deputy, and the general manager in charge of payment systems, none of whom are directly involved in monetary policy decisions, the sources said.

Dozens of executives at bodies including the banking and telecoms regulators and state TV have been fired since the start of the year in what is seen as part of a power struggle between Erdogan and the influential U.S.-based cleric Fethullah Gulen.

Erdogan blames Gulen, whose sympathisers say they number in the millions, for a corruption inquiry that led to the resignation of three cabinet ministers and the detention of businessmen close to the government in December.

Many of those who have been fired are believed to be associated with the cleric's Hizmet movement, which runs schools and charities across Turkey and wields influence in institutions including the police, judiciary and regulatory bodies.

"If true, (the central bank dismissals) would be disappointing, and again it would raise questions about the independence of the central bank," said Timothy Ash, head of emerging markets research at Standard Bank in London.

"The hope would be that the CBRT (central bank) is still a meritocracy, irrespective of political beliefs and faith."

The central bank, which ramped up rates in January partly to defend the lira, cut them for the first time in a year last month despite stubborn inflation, weeks after Erdogan called for such a move.

Erdogan later said the bank's 50 basis point cut in its one-week repo rate, the main rate at which it currently funds the market, had not been enough. (Reporting by Asli Kandemir; Writing by Nick Tattersall; Editing by Toby Chopra)

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