UPDATE 2-Turkey's Erdogan to move CHP's Isbank stake to Treasury

Turkish President Tayyip Erdogan said on Tuesday that the Treasury will take over a 28 percent stake in Isbank, the country's largest listed lender, from the main opposition Republican People's Party (CHP). Erdogan has said in the past that the stake, which was bequeathed to the CHP by Mustafa Kemal Ataturk, founder of the Turkish Republic, will be moved to the Treasury.

"Political parties do not have the right or authority to take part in banking activities," Erdogan told reporters following a parliamentary speech to his AK Party's lawmakers. Erdogan's comments knocked 6 percent off Isbank's share price. The CHP, which appoints four members to Isbank's board, opposes the move by Erdogan, who said that Ataturk had bequeathed the stake to the Treasury, not the party.

"I believe this parliament will take this historic decision, with God's permission, and the 28 percent Isbank stake will be transferred to the nation's treasury," Erdogan told lawmakers. In addition to the CHP stake, Isbank has a 31.4 percent free float and 40.5 percent is held by the Isbank pension fund.

At 28.1 percent, the CHP's holding is worth around 7.32 billion lira ($1.41 billion), based on Isbank's market capitalisation of some 26.04 billion lira. The CHP has said that its members on the Isbank board and the party do not get a dividend payout from the bank.

Erdogan said the timing of the transfer to the Treasury would depend on how long the parliamentary process takes. Isbank shares were trading 6.43 percent lower at 5.38 lira at 1326 GMT. (Reporting by Sarah Dadouch and Ali Kucukgocmen; Writing by Daren Butler Editing by Ece Toksabay and Alexander Smith)