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Buying, Renting, or Living in North Cyprus ? There are 27 Banks to choose from - which Bank should you choose ?
In today's world, it's almost impossible to imagine running our personal and business financial affairs without utilizing the services of a Bank and most of us will have at least one bank account, some some of us have several accounts and others may have many, but why would you need several, or many Bank accounts ?
So, what makes a Bank a 'great' Bank ? Some people view online banking as an absolute necessity, others wouldn't touch online banking with a barge pole. Some people view banks as a necessary evil, others couldn't manage their financial affairs without a Bank account. In short, not everyone's banking needs are the same and that's why some may recommend a certain Bank whilst others tell you not to touch it.
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A local Bank Account is an advantage, but not a necessity.
It's not an absolute necessity, not even for those living permanently in North Cyprus. Using an account from a foreign Bank is simple enough, especially if you have online access and a debit card which can be used to withdraw cash from any of the many cash machines throughout North Cyprus. In fact, many expats adequately manage their finances using their existing (foreign) bank account(s) and a debit and, or credit card.
Sterling, Euro, American Dollar and Turkish Lira are available from cash machines, but check whether your bank charges you a transaction fee for withdrawing cash, and if you withdraw a foreign currency, keep an eye on the exchange rates which will almost certainly be 'not' as favourable as those available locally from banks and exchange bureaus.
Usually, amounts up to £500, or the foreign currency equivalent, can be withdrawn daily from cash machines. It's always cheaper to make a withdrawal from a cash machine using a debit card, in the currency in which the account is held so, if its a Sterling account, withdraw Sterling. Withdraw Turkish Lira from a cash machine using a debit card linked to a Sterling account and you will almost certainly pay a transanction fee and lose out on the exchange rate which will be lower than that available locally for a cash transaction.
There are a number of reasons why you may need, or it may be more convenient for you to open a local Bank Account.
If you intend making a major purchase such as a property, or a car, whilst you can pay using a cheque from a bank located outside North Cyprus, it 'may' take up to 30 days for the cheque to clear and as a result, the seller is unlikely to be keen to release the keys to a vehicle, or villa (for example), until they have received the cleared funds in their bank account. You may not wish to wait that long. An electronic money transfer from a foreign bank into a local account usually takes 3-5 days, but (again), check how much it is going to cost you. Money transfers coming into banks in North Cyprus usually 'have' to come through a bank in Turkey and they will almost certainly make a charge for handling the transaction.
You may wish to take advantage of the higher bank interest rates that are available on local currency deposit accounts. Interest rates on deposits will be at least double, possibly treble, or maybe, even quadruple the rates that are available at your 'foreign' bank, but when changing your Sterling (for example) into the local currency (Turkish Lira) don't forget that there is a risk involved. If the exchange rate shifts, the value of your deposit (measured in your 'own' currency) also shifts. It can go up and/or down. Your deposit may increase, but equally, it may fall in value. If you ever want, or need to change the foreign currency back to the original currency and the exchange rate has shifted in the wrong direction, you may not get back the amount that you originally deposited. The amount of interest earned on the deposit account may easily be wiped out by the loss made on the currency transaction. On the other hand, if the currency exchange rate shifts favourably, you may win twice.
If you are living permanently in North Cyprus, it is more convenient and much easier to use a North Cyprus bank account to pay utility bills such as electric and telephone.
Usually, North Cyprus banks offer Sterling, Euro, Dollar and Turkish Lira accounts.
Personal Banking in North Cyprus - a newcomer's guide
Believe it or not, there are twenty seven (27) banks in this small country. This is all the more surprising, since according to the international political community, the Turkish Republic of Northern Cyprus is illegal ! But no matter, need a Visa or MasterCard ? No problem.
All of the banks are under close regulation by the TRNC Government-owned Central Bank, based in North Nicosia. In turn, most national institutions in North Cyprus are influenced by Turkey. Tight regulations are in place, which means that should the banking crises of 1994 & 2002/4 be repeated, investors will not lose all of their money !
Should the bank that you choose as the custodian of your cash, go down, then the Central Bank guarantees you a minimum of Euro 20K, should your savings per bank be in excess of this number. Eggs in Baskets comes to mind.
All the banks have to apply strict Fiscal Rules in order to retain their licence to operate. This includes having all transactions with a 'cashier at the counter' being signed off by a supervisor in the background. (Recently there seems to have been a relaxation of this process; perhaps due to the installation of security cameras or improved syetems).
Banking fiscal rules in North Cyprus also ensures that the papermaking industry will never be under threat in the Levantine area. Now, we all know that paper is a sustainable product; efficient plant husbandry, selective harvesting & sensible re-cycling programmes Europe-wide mean that we won't run put of paper anytime soon; however, it seems that North Cyprus banks are doing their very best to reverse this environmentally sensible process. How? Before you open a bank account here take some time to exercise your writing fingers, hand, wrist & arm; your limbs will need to be in top condition in order to sign all the paperwork i.e. every page of the contract and what seems like dozens of other bits of triplicate paper, all in Turkish of course; you may have no idea what you are signing for. Likewise, at the transaction counter, your digits will be called into rapid action; paying in or taking out for whatever reason e.g. cash deposits or withdrawals, currency exchange, credit card payments, utility bills etc; you will find yourself asked to sign interminable bits of paper & given a copy to take home to file - or ?
So who owns these numerous banks ? Before you decide which bank to appoint, it is advisable to ask the executive(s) you meet for discussions about ownership & business structure; then check out the information you have been given on a website. Recently, a potential customer followed this process to find that the information given by the 'Representative' and that on the Bank's website were in conflict over several issues; negotiations were promptly ceased.
Banks can be owned by Turkish Corporations, based in Ankara or perhaps Istanbul; some are Turkish Cypriot owned, either subsidiaries of established & trusted companies, or are privately owned. Others may be linked to British banks, or some in the Eurozone. (HSBC banks in North Cyprus have recently been acquired by a North Cyprus based business; this was done to satisfy Global Banking Regulators about fiscal propriety over such matters as international money laundering). There are also banks owned by Gulf States; and it is expected that Russian based banks will soon appear.
Should you be attracted to the interest rates offered by some of the smaller privately owned North Cyprus banks, then you should satisfy yourself that the rates (currently up to 14% on Turkish Lira) can be sustained & affordable. Insist on knowing about their 'borrowing clientele' - are they private borrowers like young families with a low interest mortgage, or perhaps large construction companies or other corporates paying off high interest loans. Don't be afraid to enquire about cash losses and default rates, & the possible affect on your own investment rates. Insist on knowing about the bank's Supervisory Board: Are these people up to the job, financial, economics & banking experienced, qualified, successful, proven managers & analysts & fiercely independent ?
Currencies: You can open accounts in North Cyprus in the important international currencies e.g. Turkish Lira, Euros, US Dollars, UK Sterling. Others may be available on request.
Credit Cards Most banks offer VISA and/or Mastercard; although the mimimum amount owing must be paid monthly.
Debit Cards OK, as per everywhere else.
Direct Debits Available via your Current Account as throughout Europe & the US etc.
Deposit Accounts Can be opened in all banks, in the four main currencies at varying rates of interest & term.
Electronic Banking Available everywhere - saves on paper!
Automatic Telling Machines (ATM's) Available everywhere, dispensing a variety of currencies.
Electronic Money Transfer Can be done between banks here & the UK, EU, US, Turkey & others. Is it an easy & efficient process ? Can be !!
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Contact details for North Cyprus Banks
International Money Transfers into North Cyprus Banks
North Cyprus Credit Card
Interest on North Cyprus Bank Deposit Accounts
Cash Machines in North Cyprus - withdrawing Turkish Lira
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