Halkbank says Turkish government working on issue of executive's U.S. detention

[March 29, 2017]  ISTANBUL (Reuters) - Shares in Turkish state lender Halkbank plunged as much as 16 percent on Wednesday after U.S. prosecutors charged one of its senior executives with participating in a multi-year scheme to violate U.S. sanctions against Iran.

Halkbank <HALKB.IS> confirmed Mehmet Hakan Atilla, its deputy general manager, had been detained in the United States and said it and the Turkish government were working on the issue.

Atilla is accused of conspiring with wealthy Turkish gold trader Reza Zarrab to conduct hundreds of millions of dollars of illegal transactions through U.S. banks on behalf of Iran's government and other entities in that country.

"Our bank and relevant state bodies are conducting the necessary work on the subject and information will be shared with the public when it is obtained," Halkbank said in a statement.

Turkish Foreign Minister Mevlut Cavusoglu said the case would be discussed with U.S. Secretary of State Rex Tillerson when he visits Ankara this week. Cavusoglu, speaking to broadcaster TRT Haber, also called for a transparent process regarding Atilla's arrest.

The arrest of the 47-year-old banker escalates a case that has added to the tensions between the United States and Turkey. President Tayyip Erdogan has previously said he believed U.S. authorities had "ulterior motives" in prosecuting Zarrab, who was arrested in March 2016 in Miami.

Zarrab has denied the charges in his case. It was unclear whether Atilla has hired a lawyer or made a bail application.

Mehmet Hakan Atilla (R), a deputy general manager of Halkbank, is shown in this court room sketch with his attorney Gerald J. DiChiara (C) as he appears before Judge James C. Francis IV in Manhattan federal court in New York, New York, U.S., March 28, 2017. REUTERS/Jane Rosenberg

Shares in Halkbank, Turkey's fifth-largest lender by assets, fell as much as 16 percent in early trade, putting them on track for their biggest one-day loss since the stock was floated in 2007. By 0736 GMT the shares had recouped some losses and were down 11.3 percent at 10.70 lira.

The lira <TRYTOM=D3> weakened more than 1 percent late on Tuesday after the news, while the Istanbul bourse's index of bank stocks <.XBANK> fell more than 2 percent on Wednesday.

(Editing by David Dolan and Nick Tattersall)

[© 2017 Thomson Reuters. All rights reserved.]

Copyright 2017 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.