21 Nov

Economic activities contribute to increase of banking sectors in Turkey since expectations have developed rapidly and there is a stability which has been sustained in the financial markets. Therefore, this situation reflects to ascend the effectiveness of supervision in the banking system.

The banking sector shapes a great part of the Turkish financial system in its dynamic economy because most of the transactions and activities of money and capital markets are complemented by banks. In particular, both private and most state banks have close connections to large industrial groups and holdings.

Establishment of Bank in Turkey

So as to ensure financial stability, there are lots of structural reforms which have been introduced in the banking system. Thus, any bank to be established in Turkey shall accomplish certain requirements in accordance with the Banking Law No 5411 such as constitution requirement as joint stock market and a paid-up capital amount of minimum thirty million Turkish liras. Also, this requirements involve the importance of financial strength and respect and the founders shall have the required competence for the business. Hence, the founders should meet these requirements and these regulations make room for incentive of banking sectors.

All banks in Turkey are subjected to the Banks Act and to the provisions of other laws regarding to banks. In regard to this, all new law or regulations are provided by the Banking Regulation and Supervision Agency and aim to safeguard the rights and benefits of depositors. Moreover, the Bank Association of Turkey is the representative body of banking sector which constituted for protecting and promoting the professional interests of its members. This is the official authority for licenses for bank establishment and operations in Turkey. This law raises responsibilities of ownership, personnel of banks and brings in new liabilities to them. Also, banking legislation enables entrepreneurs to set up banks and makes contribution to recovery of market.

Banking Sector for foreign bankers

Any bank established abroad which will actuate in Turkey by opening branch within the framework of the principle and procedures set by the Board should to meet some followings. It is vital that there are no distinctions between foreigners and Turkish companies in order to establish bank since the legislature procedures are the same. In conformity with the Banking Law No 5411, its primary activities must not have been prohibited in the country in which they are headquartered and also the supervisory authority in the country, where in the headquarters of the bank is located should not have the views regarding its operation in Turkey. This implementation assists to establish foreign bank in Turkey because there is no strict in terms of legal procedure in licenses and company establishments.

In respect to this, operating license has a powerful influence on banking sector in terms of procedure. According to article 10 of the Law No. 5411, the banks are permitted to be established in Turkey or permitted to open up branches in Turkey shall be obliged to receive license for operation from the board. The decision regarding license shall be made within three months, the determination of this license issuance term may be regarded as positive for investors in banking sector. Especially, banking laws provide an advantage for entrepreneurs in terms of time and it is not hard to establish bank in Turkey under these circumstances.

What are advantages of establishment of bank in Turkey?

One of the advantages of establishing a bank is that it is ease to establish bank or open a branch in terms of legal procedures. Although many countries encounters global financial crisis and banking sectors impacts financial crisis, Turkish economy continues to develop. Moreover, financial structure of the banking sector reinforces with the improvement of profitability performance of banks and the enlargement of financial system facilitates to develop funds and loans of the banking sector. To illustrate, many foreign bankers prefer to establish a bank in Turkey or bring their own branch to Turkey. Turkish banking sector has been attracting foreign investment from lenders in Europe, the Middle East and the Far East. As a result of this, Turkey has large scale infrastructure projects and foreign investors form a basis for banking sector.

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