Friday, 8 August 2008

Turkish Cypriot Banking History

I have finished estimating the value added of banking in Cyprus for the interwar period and I can now help with the origins of the Turkish Cypriot banks which is a bit confusing; most of what is said is based heavily on Kate Phylaktis “The Banking System of Cyprus” (MacMillan: London, 1995) and the Cyprus Blue Books. This is part of a project on T/C banking by two academics that i admire: i hope they give me premision to place extract of their work here when it is completed.

The Imperial Ottoman Bank was established in 1864; its real reason for opening a branch in Larnaca is controversial (Phylaktis argues it is due to cotton and Autherman due to the request by the Porte to have a branch in order to collect the Cypriot taxes). The Imperial Ottoman Bank latter changed its name to the Ottoman Bank in the interwar period, and remained the strongest bank in Cyprus prior to the Second World War. Over time the Ottoman bank became closely related to Turkish interests, but never lost its multinational Anglo-French character.

The Moslem Savings bank was established in 1901 just two years after the Nicosia Savings Bank and partly to the passing of a law confirming the existence of savings banks and their remit. In 1912 the Colonial government was concerned that the Nicosia Saving Bank was taking banking business that fell outside its remit as a savings bank, and pressured the Nicosia Savings bank to become a société anonyme known as the Bank of Cyprus, on the basis of the Ottoman Commercial Law. Unlike the bank of Cyprus the Moslem Saving bank did not undergo a change to a société anonyme during the interwar period; this probably indicates that the bank remained faithful to the lending requirements of the Savings Bank Law, which seems to have stipulated that all lending should be given its shareholders. Another explanation is that the Moslem savings bank was small (operated revenues and expanses of around £4,000 during the whole interwar period) and the government was thus not concerned as much on its legal footing.

The only other Turkish Cypriot saving bank to have registered with the government seems to have been a money lender: the “bank” was called Sinta Teavun Sandigi, and was registered as a savings bank in 1929. Its capital must have been very small as revenues and expenditures were around £38 pounds for the whole of the interwar period.

The only bank that was established as a société anonyme was Emniet Bank in the 1930. This bank remained small during the interwar period, having only approximately £2500 in deposits.

More research is needed to understand the interaction of the Turkish Cypriot banking institutions with he emerging Greek Cypriot institutions as well as their relations with the big Multinational banks already established on the island, such as the Ottoman Bank, Bank of Athens, the Ionian Bank and Barclays D.C.O.

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