The process of “cancellation” is underway in Turkey
One of the largest banks in Turkey, DenizBank, has practically stopped opening accounts for citizens of the Russian Federation, even with a local residence permit and registration. The event can no longer be called an unfortunate episode: the real threat of secondary sanctions from the United States, hanging over banks in Moscow-friendly jurisdictions, has created a huge systemic problem for Russian individuals and companies. Options for its radical, and not palliative, solution so far exist only in theory, in the conclusions of experts.
Today, out of ten applications for opening an account, only one receives approval — for Russian clients with a deposit of $100 thousand or more. In the old days, DenizBank accepted Russian citizens for service automatically, only if they had a foreign passport. Now, according to banking intermediaries, when applying, you must provide a residence permit and registration in Turkey (which 60% of applicants from Russia do not have), but even this does not guarantee success.
DenizBank began gradually tightening its service conditions in the fall of 2022, after the announcement of partial mobilization in the Russian Federation and a massive influx of Russians to Turkey. Then only those Russians who made a deposit of 10 thousand liras (approximately 30 thousand rubles) could acquire a bank card, using the service of an intermediary. In November, the minimum deposit amount was increased almost tenfold. But the most interesting thing began in February 2024, when DenizBank sent letters to existing clients from Russia asking them to provide documents confirming the right to reside in Turkey.
In December, another Turkish bank, Emlak Katılım, changed the conditions for opening accounts. Now this requires a working residence permit; all other options for residence permits (tourist, medical, study and real estate) are not suitable. Then, at the end of 2023, US President Joe Biden signed a decree according to which foreign banks could be subject to restrictions for helping with transactions with sanctioned persons from the Russian Federation and supplies to the Russian military-industrial complex. Thus, the situation affected both the Russian corporate sector and ordinary citizens. In January, Russian companies began to complain en masse about the closure of their accounts and the refusal to carry out transactions by banks in friendly jurisdictions, primarily Turkey, China and the UAE. According to the head of VTB Andrey Kostin, “the number of refusals to make payments by compliance control without explanation of the reasons has sharply increased.”
In addition, Kostin said, payment terms and fees have increased, and banks are asking to provide additional supporting documents, especially in relation to critical groups — electronics, computers, high-precision machines and equipment.»
“Exports and imports in Russia were left without a circulatory system of mutual payments,” economist Mikhail Zadornov noted in turn. — Blood clots have formed in all major vessels. That’s why operations are being carried out, artificial stents are being inserted somewhere, and new blood-conducting systems are being looked for.” Now, according to him, relatively small foreign banks are engaged in processing payments. Their correspondent network and IT systems cannot become an alternative to large financial institutions.
“We see the process of “abolition of our country”, its squeezing out of the international economic and financial space,” says Maxim Osadchiy, head of the analytical department of the BFC bank. – The current Turkish banking “demarche” is just one of many manifestations. The process applies to Russians regardless of their political views. And the main pressure from the United States is on “friendly” countries — primarily on China, Turkey, and the UAE. Accordingly, their banks are increasingly less willing to serve Russian clients, and they, in turn, are forced to switch abroad to payments in cash, cryptocurrencies or even gold.”
As for DenizBank’s reluctance to open accounts for Russian holders of amounts less than $100 thousand, Osadchy explains it this way:
“Does the money of a poor Russian smell worse than the money of a wealthy one? The microeconomics of such discrimination are simple: the increased risk of secondary sanctions increases compliance costs. That is, people are checked to see if they are associated with legal entities or individuals who are under sanctions. Such expenses are the same for both “rich” and “poor” clients, but the former generate more income for the bank. Accordingly, rising verification costs increase the cutoff level. So far, not a single Turkish bank has been included in the SDN blacklist compiled by the US Treasury, but trouble has begun.”