Turkey’s banking regulator chief offers to resign amid $20bn fund scandal

Turkey’s chief banking regulator, Şahap Kavcıoğlu, has offered to resign amid an investment fund scandal involving about $20 billion, saying he wanted to prevent further damage to the institution. The former central bank governor’s announcement comes as the investigation reaches senior figures in the country’s financial oversight bodies.

Kavcıoğlu said in a social media statement that he had asked President Recep Tayyip Erdoğan to relieve him of his duties following recent allegations concerning himself and the Banking Regulation and Supervision Agency, known as BDDK. According to Anka’s account of the statement, he did not say whether Erdoğan had accepted the request.

The announcement follows the arrests of three senior BDDK officials in the fund investigation, according to Euronews. Those arrests have brought the banking watchdog into the centre of a case that extends beyond investment managers to officials responsible for supervising parts of Turkey’s financial system. Arrests do not establish guilt.

The crisis emerged in September when several investment funds failed to meet investors’ withdrawal and redemption requests, Hürriyet Daily News reported. Turkey’s Capital Markets Board subsequently ordered the liquidation of more than 130 funds. The affected funds managed an estimated $18 billion to $21 billion in assets and had approximately 455,000 individual investors, the newspaper said.

Those figures describe the scale of the affected investments, rather than a final determination of money lost or stolen. The distinction matters as investigators examine alleged misconduct and the liquidation process proceeds. The outcome for investors cannot be established from the reported asset totals alone.

Before announcing his resignation request, Kavcıoğlu defended the banking regulator’s conduct in an interview with Sözcü, according to reporting by DW and other Turkish outlets. He rejected a connection between the agency’s banking responsibilities and the investment fund scandal. He also said neither he nor his family had investments in the funds or stock market.

Kavcıoğlu has headed BDDK since June 2023, after serving as Turkey’s central bank governor from 2021 to 2023. His move to the banking watchdog placed him in another senior financial institution. His request to leave now adds a leadership question to the scrutiny already facing the agency.

The broader investigation has also produced arrests and dismissals across financial institutions, according to DPA. For investors, the immediate issue remains the handling of affected funds and their assets; for regulators, the case raises questions about oversight and institutional accountability. Kavcıoğlu’s stated reason for leaving focused on protecting the agency’s reputation, rather than conceding wrongdoing.

The next step for the watchdog’s leadership rests with Erdoğan’s response to the resignation request. Kavcıoğlu’s announcement did not identify a successor or settle the allegations surrounding the institution. The continuing investigation and fund liquidations will determine the case’s legal and financial consequences, while his departure request remains distinct from any finding of liability.