Jewelers file case against lenders over gold selling
ISTANBUL - Hürriyet Daily News
After a recent regulation of Turkey’s banking watchdog, Turkish banks have started to buy and sell gold coins. AA photoIstanbul jewelers have filed a complaint to the Council of State against Turkey’s banking watchdog, citing competitiveness concerns regarding a recent regulation that empowered Turkish lenders to buy and sell gold coins.
“Creating a commercial activity field for Turkish banks, which raised 23 billion Turkish Liras in net profit in 2012, where they will compete with small tradesmen means the small tradesmen are neglected and sacrificed,” the Istanbul Chamber of Jewelers stated in the cancelation request case filed against the Banking Regulation and Authorization Agency (BDDK).
Banks have been collecting gold as the Central Bank raised the required reserve ratio for lira liabilities that can be held in gold from 10 percent to 20 percent last year. These banks with extensive gold reserves urged the Central Bank to obtain permission to sell gold.
Despite the objections of jewelers, the BDDK introduced regulation that permits banks to sell and buy gold coins.
More rivals for jewelers appeared on the scene yesterday as Turkey’s post office announced it will also begin to coin gold merchandise at 14 headquarters in 13 cities, signing an accord with the Istanbul Gold Refinery.
“We don’t have any intention to block others’ business or take a share from their business as this is a practice banks already have been conducting,” Osman Tural, the director general of the post office, told the Anatolia news agency.
The jewelers based their objections to bank gold sales on the idea that gold coins are not a financial instrument but a commodity, meaning bank involvement in the business is illegal.
“Banks will dominate this field of the sector and craftsmen will be deleted from the market,” the jewelers said in the document filed to the BDDK.
The chamber also pointed out that the state loses its tax income with this regulation. According to value-added tax code, the state only receives taxes from gold bars. This leaves banks exempt and allows them to conduct duty-free commercial transactions that are normally subject to tax.
Meanwhile, the Istanbul Gold Refinery presented a report to the Turkish Central Bank yesterday suggesting the bank provide some parts of the required reserve ratio by collecting coin and scrap gold from people so that it can be contributed to the economy.
“As the Central Bank begins to implement this regulation, the amount of collected gold would rise to 50 tons in a year, which is worth $2.5 billion,” the board chairman of refinery, Özcan Halaç, said, adding that they have sent this report to related institutions, including the Central Bank.