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Are Turkish banks safe for expat deposits and savings
| Published: | 29 Aug at 6 PM |
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The sunny shores of Turkey are fast becoming a retirement haven for expats from colder climes, but how safe are their savings in Turkish banks?
Many expats setting up a retirement home in Turkey will be aware that the local currency, the lira, has been taking a hit in currency markets worldwide. Large amounts of retirement funds have been transferred into the country due to its more favourable interest rates, but how safe would expat cash be if the worst happened?
The currency, once strong, has now lost its status, opening up the possibility of a worst-scenario crash if your preferred bank hasn’t diversified its borrowing strategies. Turkey has its Savings Deposit Insurance Fund, SDIF, an equivalent of the UK’s deposit protection scheme, and protects private individuals’ funds provided they are lodged in registered domestic banks.
The SDIF is, unlike its UK twin, a cash fund also underwritten by Turkish banks and covering lira and some overseas currencies as well as accounts linked to gold or silver. It also covers equity and other participation funds.
Offshore accounts, bank accounts with high interest rates and business accounts are not covered, and the maximum payout per person per bank is only 100,000YTL, the equivalent of £32,000. Better news is that, if official administrators are called in before a bank actually collapses, all private individual deposit accounts are fully covered.
Turkey is home to offshoots of international banks such as HSBC, Fortis and ING, but banking with them does not offer better cover. They are regarded as stand-alone banks in the country and classified as foreign commercial banks, but this doesn’t give depositors additional protection, although they can claim from the SDIF.
Turks advise using government nationalised banks, but it’s as safe to spread your money around several banks in amounts not exceeding 100,000 lira. Of course, if the lira devalues totally, all bets are off.
Many expats setting up a retirement home in Turkey will be aware that the local currency, the lira, has been taking a hit in currency markets worldwide. Large amounts of retirement funds have been transferred into the country due to its more favourable interest rates, but how safe would expat cash be if the worst happened?
The currency, once strong, has now lost its status, opening up the possibility of a worst-scenario crash if your preferred bank hasn’t diversified its borrowing strategies. Turkey has its Savings Deposit Insurance Fund, SDIF, an equivalent of the UK’s deposit protection scheme, and protects private individuals’ funds provided they are lodged in registered domestic banks.
The SDIF is, unlike its UK twin, a cash fund also underwritten by Turkish banks and covering lira and some overseas currencies as well as accounts linked to gold or silver. It also covers equity and other participation funds.
Offshore accounts, bank accounts with high interest rates and business accounts are not covered, and the maximum payout per person per bank is only 100,000YTL, the equivalent of £32,000. Better news is that, if official administrators are called in before a bank actually collapses, all private individual deposit accounts are fully covered.
Turkey is home to offshoots of international banks such as HSBC, Fortis and ING, but banking with them does not offer better cover. They are regarded as stand-alone banks in the country and classified as foreign commercial banks, but this doesn’t give depositors additional protection, although they can claim from the SDIF.
Turks advise using government nationalised banks, but it’s as safe to spread your money around several banks in amounts not exceeding 100,000 lira. Of course, if the lira devalues totally, all bets are off.
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