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Information For Foreign Banks


OPERATION OF FOREIGN BANKS IN TURKEY THROUGH GETTING AUTHORIZATION OR OPENING REPRESENTATIVE OFFICES

 

Foreign banks include banks established in Turkey with wholly or partly foreign capital and banks established abroad and operating in Turkey through representative agencies. Foreign banks can carry out all banking operations in Turkey by opening a branch; however, through representative offices, only some limited transactions can be conducted[1].

 

  1. Opening a Branch in Turkey and Obtaining Authorization

As per Article 6 of Banking Law numbered 5411 “The establishment of a bank in Turkey or the opening of the first branch in Turkey by a bank established abroad shall be permitted upon affirmative votes of at least five members of the Board provided that the establishment conditions laid down in this Law are fulfilled.  The principles and procedures for permission applications and granting permissions shall be determined by a regulation to be issued by the Board. The decision regarding the permission shall be notified to the applicant within three months following the application date or after the applicant provides the missing application documents, if any. If any missing document is not provided within six months, then the application shall become invalid.” 

Any bank established abroad that will operate in Turkey by opening a branch within the framework of the principles and procedures set by the Board should meet the following conditions as provided by Article 9 of Banking Law;

a)        Its primary activities must not have been prohibited in the country where they are headquartered,

b)        The supervisory authority in the country, wherein the headquarters of the bank is located should not have negative views regarding its operation in Turkey,

c)        The paid-in capital reserved for Turkey should not be less than the amount indicated in Article 7, (30 million TL)

d) The members of the board of managers should have adequate professional experience to be able to satisfy the requirements laid down in the corporate governance provisions and to perform the planned activities,

e) It must submit an activity program indicating work plans for the fields of activity covered by the permission, the budgetary plan for the first three years as well as its structural organization.

f) The group including the bank must have a transparent partnership structure.

An application for operating permission cannot be granted for the activities prohibited due to the violation of the local legislation in the country where such institutions are headquartered.

It is obligatory to obtain operating permission for a foreign bank which will obtain permission from Banking Regulation and Supervision Agency to open up a branch. The establishment permission of a bank shall be revoked by the Board decision in case of failure to apply for operating permission in addition to the issue of establishment permission as per Article 11.

The regulation which determines principles and procedures provided in Article 6, The Regulation on the Operations of Banks Subject To Permission and Indirect Shareholding published in the Official Gazette dated 01.11.2006 and numbered 26333. Articles 4-7 of this Regulation lay down the principles and procedures concerning the activities of representative offices opened in Turkey as well as principles and procedures regarding the establishment of branches of foreign banks. Overseas banks intending to open their first branches in Turkey must annex the following to their applications to be submitted to the Agency:

a) Their articles of association,

b) Copies of resolutions adopted by their competent organs for opening branches in Turkey,

c) An operational program, which analyzes benefits expected from opening a branch in Turkey, indicates operations to be carried out and operational plans containing methods of achieving internal supervision, internal control, and risk management and incorporates the financial structure of the organization in a manner also containing the capital adequacy of the relevant projections thereof,

ç) Past five years’ balance sheets and profit/loss schedules as well as independent audit reports thereof

d) Their partners/shareholders, organizational structures, organizational charts for operations outside the country of establishment and also for the country of establishment, detailed information and documents about its operations in the international financial markets and reports issued by a rating agency on such banks or financial organizations, which also includes the envisaged rating thereof,

e) Documents received from their authorized councils that their banking operations involving receipt of deposits or participation funds in the countries of establishment or operation have not been banned and/or such activities have not be restricted in any manner,

f) Minutes of their last general assembly meeting as well as a list of partners holding more than ten per cent of capital, which is duly certified by competent authorities in the countries where their head offices are located,

g) A letter of commitment that reports concerning audits to be conducted by independent auditing companies authorized as per the legislation in the country where their head office is located shall be submitted to the Agency annually.

However, The Agency is entitled to request any additional information and documents if deemed necessary. The application for operation permission has to be made until the end of the ninth month from the date of publication of the Agency resolution regarding the issue of establishment permission in the Official Gazette at the latest. Operating permissions are granted to those, which are considered appropriate following evaluation made, within maximum three months from the date of the initial permission application. Permissions granted take force as of the date of publication in the Official Gazette.

 

  1. Opening a Representative Office in Turkey

The following articles of the same Regulation also have determined principles and procedures regarding opening representative offices in Turkey. Opening a representative office in Turkey is subject to the Board’s permission. Representative offices cannot accept deposit or participation fund, cannot provide loan facilities and cannot conduct any activities determined within the Article 4 of the Banking Law or intervene with these acts. Principles and procedures relating to the activities of representative offices are determined by the Board. In fact, this provision of the Regulation has been put into force in 2008, right after the Agency found out that 47 foreign banks established in Turkey had been conducting banking activities[2]. Principles and procedures for overseas based banks intending to open up representation offices in Turkey have been determined in the Article 10 of the Regulation. According to data on the website of the Banking Regulation and Supervision Agency, lists of some foreign banks (either branches or representative offices in Turkey) are as follows:

 

  1. Foreign Representative Offices in Turkey [3]
    • AAREAL BANK A.G. (GERMANY)
    • ABC INTERNATIONAL BANK PLC (THE UK)
    • ALUBAF ARAB INTERNATIONAL BANK B.S.C. (BAHRAIN)
    • AXION SWISS BANK SA (SWITZERLAND)
    • BANCA MONTE DEI PASCHA DI SIENA S.P.A. (ITALY)
    • BANCO POPULAR ESPANOL (SPAIN)
    • BANCO SABADELL S.A. (SPAIN)
    • BANK AL HABIB LIMITED (PAKİSTAN)
    • BANK JULIUS BAER&CO.LT. (SWITZERLAND)
    • BANK OF BAHRAIN&KUWAIT (BAHRAIN)
    • BANK OF CHINA LIMITED (CHINA)
    • BNP PARIBAS S.A. (FRANCE)
    • BSI SA (SWITZERLAND)
    • CAIXABANK S.A. (SPAIN)
    • CITIBANK N.A. (USA)
    • COMMERZBANK A.G. (GERMANY)
    • CREDIT EUROPE BANK N.V. (NETHERLANDS)
    • CREDIT INDUSTRIEL ET COMMERCIAL (FRANCE)
    • DEG-DEUTSCHE INVESTITIONS UND ENTWICKLUNGSGESELLSCHAFT MBH (GERMANY)
    • DEMİR-HALK BANK N.V. (NETHERLANDS)
    • DOHA BANK (QATAR)
    • DUBAI ISLAMIC BANK (UAE)
    • DZ BANK A.G. (GERMANY)
    • GARANTIBANK INTERNATIONAL N.V. (NETHERLANDS)
    • GOLDMAN SACHS INTERNATIONAL BANK (THE UK)
    • HUNGARIAN EXPORT-IMPORT BANK PLC. (HUNGARY)
    • ING BANK N.V. (NETHERLANDS)
    • INTESA SANPAOLO S.P.A. (ITALY)
    • JSC BANK OF GEORGIA (GEORGIA)
    • KEB HANA BANK (REPUBLIC OF KOREA)
    • KFW IPEX-BANK GMBH (GERMANY)
    • LANDESBANK BADEN WÜRTTEMBERG (GERMANY)
    • MIZUHO BANK LTD (JAPAN)
    • NATIXIS SA (FRANCE)
    • NEAR EAST BANK LIMITED (TRNC)
    • NOMURA BANK INTERNATIONAL PLC (THE UK)
    • OYAK ANKER BANK GMBH (GERMANY)
    • QINVEST LLC (QATAR)
    • RABOBANK INTERNATIONAL (NETHERLANDS)
    • STATE BANK OF INDIA (INDIA)
    • SUMITOMO MITSUI BANKING CORPORATION (JAPAN)
    • THE BANK OF NEW YORK MELLON (USA)
    • THE EXPORT-IMPORT BANK OF KOREA (SOUTH KOREA)
    • UBS A.G. (SWITZERLAND)
    • UNION BANCAIRE PRIVÉE, UBP SA (SWITZERLAND)
    • WELLS FARGO BANK N.A. (USA)
    • ZİRAAT BANK INTERNATIONAL AG (GERMANY)

 

  1. Deposit Banks Established in Turkey
    • TÜRKİYE GARANTİ BANKASI A.Ş.
    • ARAP TÜRK BANKASI A.Ş.
    • CITIBANK A.Ş.
    • ING BANK A.Ş.
    • TURKLAND BANK A.Ş.
    • ICBC TURKEY BANK A.Ş.
    • QNB FİNANSBANK A.Ş.
    • DEUTSCHE BANK A.Ş.
    • HSBC BANK A.Ş.
    • ALTERNATIFBANK A.Ş.
    • BURGAN BANK A.Ş.
    • DENİZBANK A.Ş.
    • RABOBANK A.Ş.
    • ODEA BANK A.Ş.
    • BANK OF TOKYO MITSUBISHI UFJ TURKEY A.Ş.

 

  1. Foreign Bank Branches Which Can Accept Deposit in Turkey
    • THE ROYAL BANK OF SCOTLAND PLC.
    • BANK MELLAT
    • HABİB BANK LIMITED
    • JP MORGAN CHASE BANK NATIONAL ASSOCIATION
    • SOCIETE GENERALE S.A.
    • INTESA SANPAOLO S.P.A.

 

  1. Foreign Investment Banks Established in Turkey
    • PASHA YATIRIM BANKASI A.Ş.
    • STANDARD CHARTERED YATIRIM BANKASI TÜRK A.Ş.
    • MERRILL LYNCH YATIRIM BANK A.Ş.
    • BANKPOZİTİF KREDİ VE KALKINMA BANKASI A.Ş.

 

 

 

 

[1] BAŞAK, Levent. Türkiye’de Yabancı Bankaların Vergilendirilmesi, Türkiye Bankalar Birliği Dergisi, 2008.

https://www.tbb.org.tr/Content/Upload/Dokuman/810/261.pdf

 

[3] Source: Banking Regulation and Supervision Agency Web Site

https://www.bddk.org.tr/WebSitesi/turkce/Kuruluslar/Bankalar/Bankalar.aspx