Turkish President Recep Tayyip Erdogan threatened on Tuesday that the Treasury will take over a 28 percent stake in Isbank, the country’s largest private lender. Isbank shares fell by more than six percent by the day’s end. Erdogan is scrambling for resources amidst Turkey’s ongoing economic downturn, yet his efforts are likely to erode investor confidence further and exacerbate the country’s economic woes.

This is not the first time that the Turkish president has set his eyes on Turkey’s leading bank. Last September, Erdogan called for an investigation into the status of four Isbank board members appointed by the Republican People’s Party (CHP), the main opposition in parliament. His comments triggered a similar six percent fall in the lender’s shares. A month later, Erdogan first floated the idea of transferring Isbank shares to the Treasury – a threat he repeated yesterday.

The Turkish leader’s motivations for targeting Isbank are as much ideological as economic. Mustafa Kemal Ataturk, the founder of both the Turkish Republic and the CHP, established the bank in 1924. In his will, he bequeathed his shares to the party and allocated the dividends to the Turkish Linguistic Society and the Turkish Historical Society, two institutions central to his secular republican nation-building project.

Turkey’s main opposition party continues to represent these shares by appointing four of the bank’s board members. Challenging Isbank and the CHP is part of Erdogan’s lifelong struggle to undermine the legacy of Turkey’s founding father and his secularizing institutions and reforms.

On the economic front, the Turkish president feels a growing need to tap into Isbank’s coffers, especially since last week he ruled out any funding deal with the IMF. Turkey’s top public lenders, Ziraat and Halkbank, reported record “duty losses” of 2.3 billion and 1.3 billion liras, respectively, for 2018. These two banks have come under increasing political pressure to offer mortgages, debt restructuring, and credit card refinancing at below market rates, and even to bail out struggling soccer clubs to the tune of $2 billion. Meanwhile, the U.S. Treasury is set to impose a fine on Halkbank, following the 2018 conviction of its deputy general manager for helping Iran evade U.S. sanctions at the height of the Obama administration’s efforts to thwart Tehran’s nuclear ambitions.

While Erdogan’s meddling has weakened Turkey’s public lenders, Isbank has continued to be a beacon of good governance. The bank’s pension fund, representing its active and retired employees, owns a 40 percent stake, while almost 32 percent is publicly traded, with almost 70 percent of those shares held by foreign investors. Isbank reported 4.6 billion liras in profit in the first three quarters of 2018. It also stood out as a financial institution that Reza Zarrab, the Iranian-Turkish ringleader of the sanctions-evasion scheme, avoided in his transactions as he circumvented U.S. sanctions.

Erdogan’s threats against Isbank risk further volatility in the Turkish banking sector. The country’s lenders are already under great strain, losing over a quarter of their value within a year. Both Erdogan and the Turkish economy would fare better if the Turkish president could keep his hands off the country’s lenders and the lenders out of his partisan polemics.

Aykan Erdemir was a former member of the Turkish Parliament (2011-2015) and is a senior fellow at the Foundation for Defense of Democracies, where he also contributes to FDD’s Center on Economic and Financial Power (CEFP). Follow Aykan on Twitter @aykan_erdemir. Follow FDD on Twitter @FDD and @FDD_CEFP. FDD is a Washington-based, nonpartisan research institute focusing on national security and foreign policy.