Hafize Gaye Erkan, a former Wall Street executive who has been appointed the new governor of Turkey’s central bank by President Recep Tayyip Erdoğan, is accused of violating banking laws and misleading bank customers during her tenure at First Republic Bank in a pending lawsuit in the United States, according to documents shared by a Turkish journalist in the US.
Erkan, the first woman to head the central bank in Turkey, brings a distinguished background, having previously served as co-CEO of First Republic Bank and as a managing director at Goldman Sachs. However, her association with First Republic Bank has raised concerns due to the bank’s involvement in a banking crisis that resulted in its bankruptcy following a significant rise in interest rates. It was later revealed that approximately 70 percent of the bank’s deposits were uninsured.
According to Razi Canikligil, Turkish Hürriyet newspaper’s US representative, Erkan is currently facing a class-action lawsuit filed by customers of First Republic Bank. The lawsuit, filed on April 24, 2023, alleges that Erkan and a group of others violated banking laws and made false and misleading statements. Canikligil shared a copy of the complaint filed with the court on Twitter.
Merkez Bankası yeni başkanı Hafize Gaye Erkan hakkında, ABD’de yöneticisi olduğu çöken First Republic Bank’ın müşterileri tarafından bankacılık yasalarını ihlal etmek, yanlış ve yanıltıcı beyanlar vermek suçlamalarıyla toplu dava açıldı. pic.twitter.com/ryY5AOFc2S
— Razi Canikligil (@canikligil) June 9, 2023
The lawsuit against Erkan and other defendants alleges that during the bank’s earnings conference calls and in press releases, misleading statements were made regarding the bank’s financial strength, capital, liquidity and credit quality. Investors and customers were reassured about the bank’s fundamentals and stability, despite the subsequent collapse of the institution.
The class action suit against the new Turkish central bank governor, Hafize Gaye Erkan, along with other First Republic execs, looks concerning, and is another problem Turkey doesn't need right now https://t.co/OpFt9POQrF pic.twitter.com/xpqROE63lq
— Erik Meyersson (@emeyersson) June 9, 2023
Erkan’s appointment as head of the Central Bank of Turkey comes at a critical time, as the country faces economic challenges, including high inflation and the need to stabilize the Turkish lira. Analysts and investors will closely monitor her actions and decisions, particularly given the ongoing lawsuit and the controversy surrounding her tenure at First Republic Bank.