How safe is your money in north Cyprus banks?

Local Turkish banks  have a deposit protection scheme called the Savings Deposit Insurance Fund of Turkey (SDIF) or in Turkish TASARRUF MEVDUATI SİGORTA FONU (TMSF).  This is a fund first established back in the 1930’s but which has been revised regularly since.  The scheme protects certain deposits and investments that are held in registered Turkish banks and, unlike the UK, the scheme is actually a fund and not just underwritten by the banks.

Deposits covered by the scheme include Turkish Lira, foreign exchange currency or accounts linked to precious metals such as gold and silver.  However, business accounts and offshore accounts are not covered under this scheme. The maximum pay out  is 50,000 TL per person per bank – around 20,000 GBP.  Additionally, if the bank goes into administration before it collapses then ALL deposits held by private individuals are covered.

Banking with HSBC in Girne, for example, does not offer better protection as these banks are classified and registered as foreign commercial banks established in Turkey. Although these are part of well known global brands they are stand alone banks in Turkey and you would have to claim from the SDIF.

Many Cypriots, remembering the 2001 banking crisis in Turkey, will advise you to bank with one of the nationalised banks such as Vakif, Ziraat Bank or Halk Bank. They believe you are offered greater protection because these banks are unlikely to collapse. Whilst this ‘may’ be the case you can achieve the same effect by spreading your money around different banks and managing risk and return. Don’t forget the scheme only covers 50,000 TL per person per bank.

[1] Fethiye Times–are-your-deposits-protected.html
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