Wealth management in Turkey: managing wealth exposed to the lira

An affluent client base concentrated in Istanbul

Wealth management in Turkey refers to the private banking and portfolio management offered by Turkish banks and investment firms under the supervision of the BDDK and the Capital Markets Board, in a market marked by the volatility of the lira. Private banking departments are mostly based in Istanbul, and entry thresholds, often expressed in lira, vary by bank and move with inflation.

Private banking departments of the large Turkish banks are mostly based in Istanbul, where entrepreneurs and wealthy families are concentrated. Entry thresholds vary by bank and are often expressed in lira, so they move with inflation.

SPK and Borsa İstanbul: the capital markets framework

The Capital Markets Board, the SPK, licenses investment firms and portfolio managers and oversees Borsa İstanbul. Securities are held in dematerialised form at the central depository MKK, which lets investors check their own positions.

Mandates with Turkish portfolio management companies versus advice

In wealth management in Turkey, clients can grant a discretionary mandate to a portfolio management company, often a bank subsidiary, or stay with advisory management. The contract sets the risk profile, permitted asset classes and reporting frequency.

Turkish funds, eurobonds and government bonds

The available range includes lira money market funds, Turkish equity funds, foreign-currency funds and eurobonds issued by the Turkish Treasury or large companies. Turkish sovereign risk remains a central factor in these investments.

Gold, a traditional asset class

Turkish savers have traditionally held a lot of gold, and banks offer dematerialised gold accounts, gold funds and exchange-traded certificates. These products respond strongly to demand for protection against inflation and depreciation.

Inflation, the lira and real returns

With persistently high inflation, an attractive nominal lira return can turn negative once converted into euros. A foreign investor therefore measures performance in their reference currency and tracks the effect of exchange rate moves.

Private banking at a major Turkish banking group

Türkiye İş Bankası offers private banking and has investment and asset management subsidiaries; ask about the entry threshold, the breakdown of management and custody fees, and whether reports are provided in English for a foreign client.

A place for Turkish assets, not an offshore haven

For a non-resident, wealth management in Turkey mainly makes sense for holding Turkish assets such as listed shares, real estate or a family business. International diversification usually goes through a private bank in another financial centre.

Fees, custody charges and local tax on investments

For a wealth management account, compare management fees, fund charges, custody fees and currency spreads. Turkey levies withholding tax on deposit income and certain funds, at rates that have been changed several times and should be checked when investing.

Transparency: Turkish CRS and French reporting

Securities, gold and foreign-currency accounts held in Turkey are covered by CRS automatic exchange. A French tax resident reports them on form 3916 and declares dividends, interest and gains in the annual return.

How to choose wealth management in Turkey

Before comparing institutions, define your reference currency, your investment horizon and the share of your assets you accept to expose to the Turkish lira. An investor whose spending is in euros does not have the same needs as a resident whose income is in lira.

Next, check the institution's licence and the structure that actually holds your securities. A bank, an investment firm and a portfolio management company have distinct roles, overseen by different authorities. The contract should state clearly who decides, who executes orders and who holds the assets at the depository, so that you know whom to contact in case of difficulty.

Ask for sample reports, the list of accessible products and the bank's policy on conflicts of interest, particularly when it recommends funds managed by a company of its own group.

Opening a securities account for private banking in Turkey

To invest, you will generally open a cash account and a securities account, sometimes completed by foreign-currency or gold accounts. The bank asks for a passport, the Turkish tax number, proof of address and information on the source of funds. It completes with you an investor profile questionnaire that limits the products it can offer you.

For a foreign client, know-your-customer requirements are more thorough. If these documents come from abroad, a translation or legalisation may be requested. The more consistent the file, the faster the opening proceeds, without repeated requests.

Common mistakes in wealth management in Turkey

The first mistake is judging an offer by its nominal lira return without allowing for inflation and exchange-rate movements. For an investor whose reference is the euro, a high rate can hide a real loss. Always ask for performance net of fees, expressed in your currency, over several periods and not just the best year.

The second mistake is confusing a deposit with an investment. A bank deposit may benefit from a guarantee within the limits provided, whereas a fund, a bond or a share carries a risk of capital loss. Have the nature of each product, its liquidity, entry and exit fees and redemption conditions set out in writing before signing.

A third mistake is concentrating wealth in the lira, in one issuer or in a single institution. Spreading assets across currencies, asset classes and custodians reduces risk, but requires consolidated monitoring. Finally, keep each year's statements: they are needed for the tax return and to justify the source of funds if an authority asks.

Questions to ask your wealth manager in Turkey

Start with status: which licence does the manager hold, which entity holds your securities, what protection applies if it fails and how are your assets separated from the bank's own.

Then ask about operation: frequency and format of reports, order execution time, online access and language of exchanges.

Finish with the exit terms: time to recover funds, possible fees for moving securities to another bank, procedure for repatriation in foreign currency. Before any decision, confirm the exchange and tax rules with the bank and, if necessary, a specialist adviser, because withholding rates change from one year to the next.

Gold, eurobonds and MKK custody: practical questions

Ask whether a gold holding is a dematerialised account kept by the bank, a gold fund or a certificate traded on the exchange, because counterparty risk and liquidity differ from one to the other. Request the buying and selling price displayed on the same day so you can measure the spread, then compare the result with performance in euros, since the gold price in lira can rise while its euro value does not. A French tax resident reports this account on form 3916, just like a securities account opened in Turkey.

For eurobonds issued by the Turkish Treasury or large companies, check the issue currency, the maturity and the issuer, then have the bank say in which account at the MKK depository the position will appear. Look up the withholding tax on deposits and certain funds on the day you invest, since the rates have been changed several times. If you consider Türkiye İş Bankası, ask for its reports in English and for the management and custody fees shown separately, line by line.

Know which authority to approach. The BDDK oversees the bank, while the SPK licenses the investment firm and the portfolio manager and oversees Borsa İstanbul, so a complaint about a fund sold through a bank subsidiary may involve both. Write first to the institution, keep the reply, then ask the relevant authority what remedies exist. Because the CRS covers securities, gold and foreign-currency accounts held in Turkey, make sure the tax residence you declared at opening is current: a change of country must be notified, not left for the next annual statement. Keep a dated copy of that letter for your own file.