Turkey has drafted two of its biggest banks, İş Bankası and state-run Ziraat Bankası, to liquidate 131 investment funds involved in a speculative bubble that has shaken capital markets and put billions of dollars at risk for tens of thousands of investors. The liquidated funds hold about $17bn in investments across more than half a million accounts for 300,000 investors. Finance Minister Mehmet Şimşek said the problematic area has been placed under quarantine, with no systemic risk, as the affected funds represent just 10% of the sector.

The liquidation process is expected to take up to three months. Authorities have provided liquidity support to avoid forced selling, and a state-owned Islamic bank is in talks to take over two household savings companies linked to the scandal. Four unnamed suspects have been jailed pending trial, including a fund board chair and members, while 51 people face travel bans and asset restrictions.

Justice Minister Akın Gürlek said legal action is being taken against those targeting citizens’ savings through Ponzi-like schemes. Liquidators will make gradual asset sales, returning proceeds to investors proportionally. The Capital Markets Board has acknowledged concerns about inflated fund valuations.

Turkey’s BIST 100 index was down 1.3% by lunchtime Friday, about 8% lower for the week — its worst weekly performance since March 2025. The crisis stems from funds building concentrated positions in related companies, inflating share prices and net asset values, which attracted new investors until redemptions failed, triggering a rush to withdraw savings.