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Ziraat Bank Loan is Illegal

14 January 2013

The main plank in the reconstruction of Nicosia municipality is the proposed loan of TL 90 million from Turkish owned Ziraat Bank. It appears that the loan was being made as a matter of policy to help unravel the huge problem that the Nicosia Council strikes were causing the government.

However, yesterday there was an interesting slant on this proposed loan from Bulent Berkay a banking consultant who was the former head of the Association of Banks.

He says that, in fact, no bank in the TRNC can make a loan of that size legally. Under the banking laws of the TRNC, a bank can only lend a maximum of 25% of its share capital or 4% of total deposits.

Based on this law, Mr Berkay says that Ziraat Bank can only lend up to TL 45 million. He questions how the law will be amended to allow for a loan of this size to be advanced. He also asks if other banks will also be allowed to relax their lending rules.

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