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Türkiye anticipates settling a long-running dispute over sanctions-busting allegations against state lender Türkiye Halk Bankasi AS (Halkbank) with a manageable fine, according to a person familiar with the matter, who spoke to Bloomberg on Thursday, potentially marking a significant breakthrough in U.S.-Türkiye relations.
President Recep Tayyip Erdogan discussed the issue with U.S. President Donald Trump at the White House last month, the person said, speaking on condition of anonymity due to the sensitivity of the matter.
The potential resolution would bring an end to Halkbank's nearly decade-long legal saga in the United States, where the lender was indicted in 2019 for allegedly participating in a multibillion-dollar scheme to evade sanctions on Iran.
Halkbank faces charges of fraud, money laundering, and sanctions violations, making the case one of the biggest thorns in the bilateral relationship between Washington and Ankara.
The bank has argued it was immune from prosecution because it is majority-owned by the Turkish state, that the conduct occurred outside the U.S., and that it is beyond the jurisdiction of U.S. courts.
A federal appeals court rejected the immunity defense last year, and the bank is now awaiting a decision on whether the U.S. Supreme Court will review the lower-court ruling.
Halkbank's shares have risen over 11% since the Erdogan-Trump meeting amid growing expectations for a resolution to the long-running saga.
The bank has largely stayed out of the Eurobond market since the wake of the sanctions allegations.
A settlement would allow the bank to avoid a drawn-out legal battle that could result in heavy fines and loss of access to the U.S. financial system.
Halkbank can reportedly withdraw its Supreme Court appeal, effectively bringing the matter to a close if the U.S. Justice Department decides to drop the case.
Erdogan sought to make his meeting with Trump at the White House a turning point to reset the strained ties between the two NATO allies. A settlement for Halkbank would serve that goal.
Mehmet Hakan Atilla, a former executive of the lender, served about three years in a U.S. prison after being convicted of evading sanctions on Iran.
The man at the center of the allegations, Turkish-Iranian gold trader Reza Zarrab, pleaded guilty and became a witness in the case against Atilla.
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