WASHINGTON - The Federal Reserve Board has added Turkey to the list of countries whose banks can open branches in the United States.
The Fed ruled this month that Turkiye Vakiflar Bankasi TAO of Ankara, Turkey, meets a key requirement for foreign banks that want to branch in the United States: that authorities in its home country subject its banks to "comprehensive supervision and regulation on a consolidated basis."
Because Turkey meets this standard, the Fed gave $2.7 billion Turkiye Vakiflar permission to open a branch in New York.
The decision comes on the heels of a December ruling by the Fed that Mexican authorities also meet the standard, which was part of the Foreign Bank Supervision Enhancement Act of 1991.
"It is a good development, because it shows that the logjam is being broken at the Fed," said Gil Schwartz, a partner at Schwartz & Ballen.
More and more of these decisions involving other countries should appear during the coming months, he said.
In its Jan. 4 ruling, the Fed said three Turkish government entities - the Undersecetariat of Treasury and Foreign Trade, the Central Bank of Turkey, and the Prime Ministry Supreme Board of Supervisors - all regulate the bank.
These agencies examine banks on-site, require periodic financial reports, and meet with bank management, the Fed said.
Also, the Turkish Treasury conducts annual audits where it assesses capital adequacy, asset quality, and compliance with regulations, the Fed said.