Commission says Turkey's banking regulatory system complies with EU standards: Deputy PM

Turkey's banking sector supervisory and regulatory arrangements are in compliance with European Union rules, according to the European Commission, Deputy Prime Minister Nurettin Canikli said in a written statement late on Dec. 22.

According to Regulation (EU) No 575/2013 of the European Parliament and the Council of the Commission's Implementing Decision of the EU No. 2016/2358 from Dec. 20, Turkey's banking supervisory and regulatory framework have been affirmed to be equivalent to EU standards, said Canikli. 

"Turkey's banks were regarded as 'companies' by EU lenders prior to the decision, and they were subjected to a relatively high risk weight. They will, from now on, be considered as 'banks' after the decision, and they will be subject to a relatively lower risk burden," he added. 

He also pointed out that the investments to be made in Turkey by EU banks were subject to the stricter application of credit limits but would now benefit from more advantageous restrictions along with similar countries after the decision.

The commission said Turkey, New Zealand, the Faroe Islands and Greenland have supervisory and regulatory arrangements in place which comply with a series of operational, organizational and supervisory standards reflecting the essential elements of the union's supervisory and regulatory arrangements applicable to credit institutions. 

"Based on the fact that some of our banks operating in the EU will see a decline in their risk weight regarding their investments into Turkey, they will have the advantage of capital cost and also some relief in the strict application of the credit limits of our banks operating in the EU. While our banks with an EU-based majority owner could not benefit from several advantages...