Handbook for Foreigners to Conduct a Banking Business Under Turkish Legal System : Establishment of a Subsidiary

This article essentially aims to present the conditions for foreigners in establishing a banking business in Turkey. To this end, Turkish Code on Banking Law numbered 5411 (hereinafter “TBC”) shall be elaborated along with other necessary codes, ordinances and circulars, subjecting the major type of the institution as subsidiary. Admittedly, almost every national banking system has been in a change in the aftermath of the last global financial crisis emerged between the years 2007/08 in United States of America. The said financial crisis has been spread throughout the world with its devastating results, so to speak. Thus, every country's banking system has had its own part in terms of a change. In fact, concerning certain fields of the banking system, in the context of a requirement, the alterations were pretty substantial. Nevertheless, a foreigner can set up its banking business in the form of four types of establishments such as banking subsidiary, branch, agency and representative office, generally speaking. However, setting up a subsidiary to maintain its business in such an exclusive field could be deemed as most challenging and multifunctional type. Plus, it generates the adequate creditworthiness in the market, which usually enhances the amount of business. This fundamental way of establishment for banking corporations to orchestrate and run their business, has its own obligatory and characteristic conditions to be met. As it might be imagined, in operating such a critical market, the conditions usually have higher standards than the adequate ones. Major amendments under Turkish banking legal system have been made by the Turkish Banking Regulation and Supervision Agency (hereinafter “Turkish Supervision Agency”) in the aftermath of the domestic banking crisis held in 2001. And of course, some minor changes have been accorded after the last global financial crisis