US prosecutors drop extension of Turkish banker’s sentence

New York prosecutors have withdrawn an appeal to extend the sentence of a former executive at Turkey’s state-owned lender Halkbank, said Turkey’s state-owned Anadolu news agency.

Halkbank shares rose nearly 4 percent after the report as market participants saw the move as further indication of an improvement in diplomatic ties between Washington and Ankara.

A US court sentenced Hakan Atilla, an executive from Halkbank, to 32 months in prison in May for helping Iran evade US sanctions in a case that has strained already tense ties between NATO allies Ankara and Washington. Halkbank, which denies any wrongdoing, has since faced potential US fines in relation to the case, which Turkish President Tayyip Erdogan has condemned as a political attack against his government.

The Turkish news agency Anadolu, without citing sources, said the New York prosecutor’s office had originally filed the appeal, saying the sentence was too short. It said the court had asked prosecutors to present details of the appeal by Dec. 6, but that the appeal had later been withdrawn.

No further details were immediately available and the New York prosecutor’s office was not available for comment, having yet to open on Friday morning.

Halkbank’s dollar-denominated bonds jumped 0.74 cents to 84.70 cents after the report.

Last month, Turkish Foreign Min- ister Mevlut Cavusoglu said after talks with US officials in Washington that the two sides had discussed returning Atilla to Turkey where he can serve the rest of his sentence.

Erdogan also said last month that he had discussed the case of Halkbank with US President Donald Trump, saying the talks were on a “positive path.” He said, without elaborating, that Trump had told him “he would instruct the relevant ministers immediately” regarding the case.

Atilla is expected to be released on July 25, Anadolu said. He had already served 14 months when he was sentenced.

Tensions between the NATO allies accelerated a lira sell-off this year, although the currency’s performance has improved in tandem with diplomatic ties.

Relations between Ankara and Washington began to improve after US pastor Andrew Brunson, who was on trial over terror-related charges in Turkey, was released in October.