Banks eye former forest land

The countdown for the sale of land formerly classified as forest, which is also known as 2B, has started. As the talks between right holders and Finance Ministry, banks also aim to benefit of this process.

Sale process of 2B land started. Official applications for the sale, which involves 5.4 million people, are still ongoing while right holders complain about the high prices. Banks will step in for the people who will not be able to afford these high prices..

According to Vatan Daily's Ufuk Şanlı, government officials met up with banks that want to provide loans for the sale of 2B land, through which the finance ministry aims to raise 26 billion liras (15.2 billion US dollars). A banking source said: ''We believe a significant amount of this will be covered by bank loans. So the market for that will be really huge.''

According to Banking Regulation and Supervision Agency (BDDK) data, total amount of bank loans is 724.3 billion liras as of May 22, 2012. If the urbanization ministry and finance ministry can agree on the deal, the banks will be able to tap a market that is equal to 3.6 percent of current loans.

Previously three state banks, Ziraat, Halk and Vakıf Banks, were expected to provide loans for 2B. However, private banks also wanted involve in the process because of the huge demand from right holders and the credit squeeze in the banking sector. As a result a working group has been set up under the roof of Turkish Banking Association.

Finance Ministry will seal the deal

There are two major obstacles for banks in giving 2B loans. According to effective laws, right holders cannot show the land they are buying as collateral. Because finance ministry issues a temporary 'holding right' instead of an actual title to the applicants. As these licenses are not considered as titles, banks cannot give loans to the holders.

A senior banking source said the solution was easy. ''The ministry should prepare a special document. Right holder who wants to buy the land with bank loan will apply for it with this special document. So they can get mortgage loan,'' he said. If finance ministry and banks can agree, consumers will benefit from this. They will be able to get a 44 percent discount by paying in one instalment. And they can pay their loan in long term maturities. A public bank executive said to be able to issue securities based on this mortgages and sell it to international markets they would need more than just a 'holding right' document. ''That's why this problem must be solved,'' he added. (Vatan, May 29 2012)