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Recent Developments related to the Banking Sector 1999-2000 Under the Staff Monitoring Program with IMF the Turkish government launched a program aiming at sustaining stability, reducing inflation described in the authorities' Memorandum of Economic Policies of June 26, 1998. Main features of the program included; (i)
a large
and sustained improvement in the primary budget balance, to narrow the large
public sector deficits that lie at the heart of the inflation process; (ii)
the
adjustment of public sector wages and agricultural support prices in line with
targeted inflation to minimize inflation inertia; (iii)
structural
reforms to ensure a lasting strengthening of the public finances; (iv)
stepped
up privatization to enhance economic efficiency and lower the domestic borrowing
requirement; (v)
measures
to strengthen the banking sector; and (vi)
limits on
the expansion of the Central Bank's net domestic assets to ensure the
consistency of overall policies.
Turkey has made progress in the implementation of these
economic policies. Developments in 1998 and 1999 clearly indicate6d the need to
reinvigorate the adjustment effort through a comprehensive program of fiscal and
structural reform. Within the context of the Government's agenda certain fiscal
and structural reforms have been realized recently. The major legal and regulatory measures related to the banking sector
and the financial system are summarized below. June
1999 §
New Banking Law The
government has passed a new Banking Law in June 1999, which was published in the
Official Gazette dated June 18, 1999. The new Law has established an independent
banking regulating and auditing institution free from political authority and
important prudential standards have been introduced.
August
1999 §
Change in the Social Security System Regulation Reform of the Social Security System, which was one of the top priorities of the government's agenda, was realized. The parliament passed new legislation on the Social Security System. The effects of such a major social security reform will influence the future of the present as well as the next generation. Within the context of the new legislation, the age of retirement was increased to 58 for women and to 60 for men. The number of paid-premium day is increased from 5,600 to 7,000. The new legislation also brought a phased transition to the system of unemployment insurance within 10 years. §
Standard Ratio for "Foreign Currency Net General Position/Capital
Base" With
amendment in the regulation concerning Principles on the Calculation and
Application of Standard Ratio for "Foreign Currency Net General Position/Capital
Base" published in Official Gazette dated August 5, 1999, the Standard
Ratio for Foreign Currency Net General Position/Capital Base was decreased from
30 percent to a maximum of 20 percent. It was decided that the new standard
ratio would be reduced gradually in order to be effective as of January 1st,
2000. §
Decree on Accounting for and Valuation of Bank Credits and Funds
Covering Credits With
the Decision No. 99/13202 published in the Official Gazette dated 14.08.1999,
some amendments has been made in Decree on Accounting for and Valuation of Bank
Credits and Funds Covering Credits. According to new legislation, banks are
required to set aside as general reserves 0.5 percent of the total of their cash
credits and the dischargeable account receivables that are secured by 1st
group of collaterals and 0.2 percent of letters of guarantee, guarantees and
other non-cash credits. In addition, In case of inability to collect value of
compensation of non-monetary credit or of those converted into monetary credits
within 30 days after the payment or date of conversion, the credit extended is
considered fallen in default. Banks are obliged to remove their cash credits
fallen in default from the credit account to enter them into the account
receivables to be discharged. If the part falled in default is collected within
one month, it is transferred into the credit account. With a provisional article,
this period of one month shall be applied as 60 days till 2000, and the
implementation of the previous period of time will continue as of 01.01.2000. §
Privatization Attracting
foreign productive capital, promoting economic efficiency, and raising revenues
to contain public debt are the key goals of the government privatization
program. Within the context of the privatization program, the government have
tried to undertake necessary legal measures including those to allow for
international arbitration, to permit an acceleration of the privatization in the
energy and telecommunication sector. In
August, the draft law changing some articles of the Constitution has been passed
through the Parliament. With the change in the Article 47 of the Constitution,
the concept of privatization is stated in the Constitution for the first time
and the paragraphs below are added to the Article. "The
principles and procedures related to the privatization of enterprises and
properties owned by the State Economic Enterprises and other Public Legal
Entities shall be determined by Law." "
Which of investment and services governed by the State Economic Enterprises and
other Public Legal Entities to be made provided by real or legal entities on the
basis of legal contracts shall be determined by Law" Constitutional
change also enabled disputes on privileged agreements concerning public services
to be solved through national and international arbitration. International
arbitration shall be applied only to disputes including foreign features. With
an amendment in the 2nd paragraph of the Article 155, the State
Council is commissioned with communicating its opinion on privilege agreements
concerning public services within two months, and with examining drafts on
regulations and solving administrative disagreements. §
Tax Reforms The
parliament approved the legislation, which brought certain changes in some tax
laws. Financial
Millennium was postponed, and definition of income was changed, thus the
previous implementation will continue for income earned between 1999-2002. Financial
Millennium was postponed to the year 2002. Hence, repo and deposit gains
that will be earned between 01.12.1999-31.12.2002 will be subject to withholding
tax and no declarations are required for them whatever the amounts are. For
gains derived from the discharge of marketable securities, the period for
exemption is reduced from one year to 3-months and the limit is increased to TL
3,5 billion. No
transactions will be carried out depending on the declarations made on
30.09.1998. Income
tax rates except for wage income are increased by 5 points. Surveys
and works of art are exempted from taxation. Changes
was introduced in corporate tax The
provisional corporate tax rate that is calculated over gains in 6 months periods
is reduced to 20 percent from 25 percent. The Board of Ministers is authorised
to increase or decrease the rate by 5 points. The
part of gains that’s added to the capital of the institution from the sale of
subsidiary shares and immovables of the taxpayer in the year of sales is
exempted from corporate tax. The
gains that will arise from the addition of production units as capital in kind
to new companies will be exempt from corporate tax between
01.01.1999-31.12.2002. The
gains derived through the sale of the stocks issued -at the establishment or the
increase of capital- above their nominal values of the joint stocks and those
which are exceptional, will not be taxed at point. The
Board of Ministers is authorised to change the revaluation rate used in the
calculation of real estate tax base between zero and the rate declared. October
1999 §
Change in Taxation Method for Government Securities Within
the context of changes introduced by the Tax Law No. 4369, approved in July
1998, the valuation for Government Bonds, Treasury Bills and Revenue Sharing
Certificates at market value instead of purchase value was brought, and income
from these securities became subject to provisional tax. Provisional
Taxation The
provisional tax implementation of 25 percent on a 3-monthly basis was brought in
July 1998. With Law No. 4444 in August 14, 1999 the rate of provisional tax was
reduced to 20 percent from 25 percent and the period of collection was increased
to a 6-monthly basis. Article No. 279 of the Tax Procedures Code An
amendment on the valuation of securities in Article No. 279 of the Tax
Procedures Code was made in July 1998. According to the amendment, shares and
the participation certificates of mutual funds, who invest at least 51 percent
of their portfolios in the stocks of companies established in Turkey shall be
valued at purchase price, and all other marketable securities shall be valued at
market value from December 31, 1999.
Implementation of Article 279 and Provisional Taxation The
implementation of Article 279, which ensures the transfer of real value of
securities into financial tables, affects likely institutions having a high
amount of government securities in their assets. Since these institutions have
to involve unrealized interest revenues at the end of period with their tax
assessment. For
purposes of the provisional tax implementation, banks are required to take into
consideration the accrued interest of their government securities while
submitting declarations on February 15, 2000 covering both the 4th
quarterly period provisional tax and income-loss statements for the year 1999.
The implementation on the valuation of securities at market value will be valid
during the calculation of income. November
1999 §
Additional Taxation The
government passed a new law on additional taxation, which was initially designed
to meet part of the huge costs of two recent earthquakes in Turkey. The
new law, which was published in the Official Gazette dated November 26,1999,
introduced additional taxes on a wide range of income and corporate revenues and
commercial transactions. Within
the context of the law regarding the banking sector, the additional taxes were
introduced including four to 19 percent interest tax on government bonds issued
before December 1, 1999 depending on maturity, and an additional corporate tax
of 5 percent. As
being valid from as of January 1, 2000, the rates for additional interest tax on
government bonds issued before December 1, 1999 are stated as below; 1) Of the discount bonds
and bills: -
4 percent from
those whose due date falls 1-91 days later, -
9 percent from
those whose due date falls 92-183 days later, - 14
percent from those whose due date falls later than 183 days. 2)
4 percent from the interest payments for the bonds with three-year
maturity, variable interest, and quarterly coupon-payment, 3)
19 percent from the interest payments for the bonds with three-year
maturity, fixed interest, and quarterly coupon-payment. The
amount of this obligation, which has the nature of additional tax may not be
offset against the taxes to be paid, but may be charged as an expense item in
determining the commercial income (Law no.4481, promulgated in the extra issue
of the Official Gazette dated 26.11.1999, numbered 23888). December
1999 §
Recognition of Turkey's Candidate Status to the EU Turkey's candidate status for full-membership to the
European Union has been recognised officially at the Helsinki European Council. The
unanimous recognition and announcement of Turkey as a candidate country at the
Helsinki Summit, and the declaration in a clear and decisive manner that Turkey
will be treated on an equal footing with the other candidates are positive
developments for Turkey. §
Disinflation Program As
an extension of the Staff Monitoring Program signed with the International
Monetary Fund in July 1998, a new "Stand By Agreement" has been signed
recently between the Turkish government and IMF. Within the context of the new
agreement, that is to last for three years, the Turkish government launched a
disinflation program, which is aiming to achieve disinflation and growth at the
same time. Within the context of the program, the Central Bank of the Republic
of Turkey (CBTR) announced its exchange rate policy and monetary policy. The
strength of the Program enhances the credibility of the disinflation goals. In
setting disinflation goals for 2000-2002, of main importance has been balancing
the need to signal a clear break away from the past, against the difficulty of
bringing inflation down to lower single digits abruptly, given the inertial
component that inflation has in Turkey. The
fundamental goals of the program are given as, ·
to bring
down the inflation rate through implementing consistent, credible and persistent
fiscal, income, monetary and exchange rate policies, all supported by structural
reforms. ·
to reduce
real interest rates to plausible levels, ·
to
increase the growth potential of the economy, ·
to
provide a more effective and fair allocation of the resources in the economy. The main pillars on which disinflation program will
operate; a) The first pillar is a tight fiscal policy that
consists of increasing the primary surplus, realizing the structural reforms and
speeding up the privatization. b) An income policy in line with the targeted
inflation is the second pillar. c) Monetary and exchange rate policy actions
constitute the third pillar, which aim to support the contribution of the first
two in decreasing both inflation and interest rates, and to provide a long-term
perspective to the economic agents. And the main targets are determined in the Program
are given as below; -
12-month
CPI (Consumer Price Index) inflation rate: 25 percent by the end of 2000, 12 percent by the end of 2001, and 7
percent by the end of 2002. -
Public
sector primary surplus:
equivalent of 2.2 percent of GNP(for the year 2000) - Cash domestic debt: constant at 27 % of GNP -
Total
debt stock :
constant at 61 % of GNP §
Monetary Program of CBRT Within
the context of the new agreement, that is to last for three years, the Central
Bank of the Republic of Turkey (CBTR) announced its exchange rate policy and
monetary policy. The monetary and exchange rate policies are to be guided by two
considerations. First, disinflation and a rapid decline in interest rates
require that monetary and exchange rate developments become more predictable, so
as to reduce the uncertainty on the value of financial investment for both
residents and nonresidents. The strengthening of fiscal policy under the
program, level of international reserves, coupled with the financial support
from the international community, make the introduction of such a commitment
feasible. Secondly to avoid to be locked into a monetary and exchange rate
framework that while appropriate for disinflation may lead to unnecessary
rigidities in the long run, a problem that has affected many emerging markets in
recent years. Hence, there is a need for a transparent and pre-announced exit
strategy from this exchange rate regime. Exchange Rate Policy: Main features of CBTR’s exchange rate policy are as
follows: -The exchange rate basket is to be announced on a
daily basis covering one-year period. -The exchange rate basket composed of 1 US dollar +
0.77 EURO will continue to be valid. During the implementation of
the program the exchange rate policy will be designed in two different exchange
rate regimes and in two different periods. In the first 18 months which is
between January 2000 and June 2001, nominal value of the basket will be
increased according to the targeted inflation rate and in the following period
the exchange rate policy will be carried out with respect to a “progressively
widening band”. This band will widen at a rate of 15 percentage points per
annum, measured from edge to edge. The total width of the band will thus reach 7½
percent by end-December 2001, 15 percent by end-June 2002, and 22½ percent by
end-December 2002. Monetary policy; The
most important tool of CBTR at reaching its final objective of inflation is to
follow the preannounced path of the basket without permitting any deviations
from that. The
reflection of exchange rate and monetary policy is to be followed in the context
of the main aggregates from the balance sheet of CBTR. Monetary policy and
balance sheet of CBTR are designed by imposing a floor to net international
reserves in addition to a ceiling restriction for the net domestic assets item
(NDA), which are fundamental aggregates of the balance sheet. During each
quarter, NDA is to remain broadly constant at its December 1999 level) while
allowing some limited flexibility (about +,- 5 percent of total base money)
during the quarter to avoid excessive volatility in overnight rates. Within
this context, all base money is to be created through the balance of payments
and domestic interest rates are to be fully market determined, and no capital
movements will be sterilized. The interbank interest rates posted by CBRT are to
be adjusted daily in line with the movements of the overnight money market
rates. §
Amendment in the application of Reserve Requirement and
Liquidity Requirement With
the new amendment concerning the application of reserve requirement and
liquidity requirement, which was published in the Official Gazette dated
December 10, 1999, the reserve requirement ratio is decreased from 8 percent to
6 percent. On the other hand, 2 percent of TL deposits is to be held as free
deposits with the Central Bank. This new liquidity requirement may be met on the
average of daily data for the reserve requirement period, rather than on a
continuous basis. Thus, without causing any change in the total of the legal
requirements, banks are provided with flexibility in meeting their liquidity
needs on weekdays. "The
Legal Requirement Table" is shown below; The
Reserve Requirement Ratio (RR) and Liquidity Ratio (LR)
Source: www.tcmb.gov.tr §
Recent Amendments in the Banks Act No.4389 In
June 1999, the parliament had approved a new Banks Act. With the Law No.4491,
which was published in the Official Gazette dated 19.12.1999 No.23911, certain
amendments have been made in this Act in order to strengthen key prudential
regulations and to place the banking supervision framework on a proper
foundation by increasing transparency and independence in the operation of the
Banking Auditing and Regulation Agency (BRSA), and providing all of tools needed
for the improved resolution of problem banks. The
Banking Auditing and Regulation Board became fully autonomous by removing the
involvement of the Council of Ministers from all decisions in the area of
supervision other than the appointment of the members of the Board. The
decisions to licence and delicense banks, and to approve provisioning
regulations are rested with the Board. With the recent amendments, the three
year period during which a Board member was prohibited from the employment as a
senior executive in the banking sector, a provision made it difficult to find
active professional to take Board positions, was eliminated as well. The Board
is to be named by the end of March 2000, and to be in full operation by the end
of August 2000. The
prudential standards were strengthen for bank lending to owners and to single or
related parties. The ratio of total loans to those having a indirect
relationship is to be declined from the current 75 percent of capital to 25
percent until 2007 with a 5 percent decline in every six months. With the new amendments, the
Savings Deposit Insurance Fund was given authority and responsibility to
restructure a problem bank to facilitate its sale in full or in part or to
liquidate the remainder based on existing laws. The fund is no longer permitted
to lend or otherwise provide liquidity support to banks other than those under
its full control. n
New Provisioning Regulation Decree on procedures for
determination of types of loans and other types of receivables that banks are
required to set aside provisions, No: 99/13761 was published in the Official
Gazette dated 21.12.1999. With the new regulation, more stringent loan loss
provisioning in line with international standards is to be applied fully to all
new loans, including renewal of any existing loans, from January 1, 2000. According
to the Decree banks are obliged to categorize their loans and other receivables
into five subdivisions ranked according to recoverability and creditworthiness.
The provisions to be set-aside by banks in respect of their loans and other
receivables shall be in accordance with the collaterals’ value and the ability
to liquidate them within the legal framework. n
Application of Consolidation Principle in the Banking Regulations
With
these Decrees aiming at enhancing transparency and improving the monitoring
capabilities of the authorities, banks are required to issue consolidated
financial statements of themselves and their financial affiliates and to report
twice a year.
February
2000 §
Valuation of Repo and Reverse Repo Transactions and Time Deposit
Accounts and Provisional Tax Implementation According
to the General Decree on Corporate Income Tax, which was published in the
Official Gazette dated 06.02.2000, repo and reverse repo transactions, time
deposit accounts are subject to valuation process within the context of Article
No. 279 of the Tax Procedures Code. Regarding
the provisional tax implementation, banks are obliged to take into account the
accrued interest from repo, reverse repo transactions, and time deposit accounts
as of the valuation date, while submitting declarations on February 15, 2000
covering both the 4th quarterly period provisional tax and
income-loss statements for the year 1999. May 2000 §
An Amendment in the Application of Liquidity Ratio With
an amendment on the application of liquidity requirement, published in the
Official Gazette dated May 5, 2000, the liquidity ratio, which is applied to
excesses of foreign exchange position of banks is increased from 8 percent to
100 percent of total amount, which shall be hold as free deposits in TL with the
Central Bank. June 2000 §
Change in the level of coverage
by the Saving Deposit Insurance Fund The
Decision on saving deposits subject to insurance and premiums to be collected by
the Saving Deposits Insurance Fund No.2000/682 was published in the Official
Gazette dated 01.06.2000. According to the Decision, saving deposit accounts on
the Turkish lira and foreign currency deposit accounts being of the nature of
saving deposit opened by real persons (both residents and non-residents) with
domestic branches of banks operating in Turkey and authorized to accept deposit
are subject to the deposit insurance. With
the decision, the level of coverage on saving deposit accounts opened and/or
renewed after the publication of this Decision was changed. Up to 100 billion TL
per account will be covered until 31.12.2000, and up to 50 billion TL as from
01.01.2001. However, the fund still covers 100 percent of saving deposit
accounts opened before the Decision. The
premium rate shall be as follows on the basis of the quarterly totals of the
Turkish lira saving deposits and foreign currency deposits being of the nature
of saving deposit account opened by real persons; i)
25 per ten thousand for banks, who
fulfill all of the prudential ratios, ii)
26 per ten thousand for banks, who
fulfill all of the prudential ratios except one. July 2000 §
Quarterly reporting on a consolidated basis An amendment was made on the principles and
procedures related to the preparation and notification of consolidated financial
statements by banks, which was published in the Official Gazette dated July 5,
2000. With this amendment, banks are required to report quarterly on a
consolidated basis. August 2000 §
Regulations on the Savings Deposit Insurance Fund
Regulation on the Savings Deposit Insurance Fund
introduced by the Banking Regulation and Supervision Board on August 26, 2000,
defined the organizational structure, duties and responsibilities of the Fund
with conditions applicable to utilization of the Fund. Banking Regulation and Supervision Agency is
responsible for the management, functioning, auditing of the “Savings Deposits
Insurance Fund” and for establishing the principles of savings deposits
insurance. September 2000 §
Regulations on Resource Utilization Support Fund
With
an amendment to the Communiqué No.6 related to Decree No.88/12944 by Communiqué
No.27 on the Resource Utilisation Support Fund published in Official Gazette
dated September 9, 2000, the ratio of fund deduction for consumer loans extended
by banks and finance corporations was increased to 8 percent from 3 percent.
Thus, a significant distinction between consumer loans and other types of loans
extended by banks was created in terms of fund deduction. §
Decision of the Banking Regulation and Supervision Board about Kıbrıs
Kredi Bankası Ltd. Istanbul/Turkey Branch Office. With the Decision No. 59 of the Banking Regulation and
Supervision Board (BRSB) published in the Official Gazette dated September 28,
2000 and became effective on the same date, the license for accepting deposits
and engaging in banking operations of Kıbrıs Kredi Bankası Ltd.
Istanbul/Turkey Branch Office, which headquartered in Lefkoşe, was revoked in
accordance with the paragraph (3) of the Article 14 of the Banking Law No.4389.
The reason behind this decision was that Kıbrıs Kredi Bankası Ltd.
Istanbul/Turkey Branch Office failed to take measures, which are deemed to be
appropriate in line with the paragraph (2) of the same Article for the purpose
of strengthening its financial structure. October
2000 §
Decision by the Banking Regulation and Supervision Board on the transfer
of two commercial banks’ management to the Saving Deposits Insurance Fund. With the
decisions numbered 85 and 86 of the Banking Regulation and Supervision
Board, published in the Official Gazette dated 27 October 2000, the privileges
of shareholders except dividends and the management and audit of two commercial
banks, namely Bank Kapital T.A.Ş. and Etibank A.Ş. who did
not take the measures stated in the paragraph (2) of Article 14 in order to
overcome the problems in its financial structure, has been transferred to the
Savings Deposits Insurance Fund in accordance with the paragraphs (3) and (4) of
Article 14 of the Banking Law No.
4389. November 2001 §
Decision by the BRSB on requirements, which must be met by any person
who has submitted an application for founding a bank or acquiring shares of
existing banks or purchasing shares of banks under the SDIF. With the Decision published in the Official Gazette
no. 24221 of November 5, 2000, The Banking Regulation and Supervision Board
(BRSB) has established requirements, which any investor which has applied to the
Agency for founding a new bank or made a request for assignment of shares or who
intends to submit a proposal for purchasing shares of banks put under control of
the Savings Deposit Insurance Fund (SDIF) shall meet, as described in detail in
the following paragraphs in accordance with paragraph (11) of Article 3,
paragraph (2) of Article 7 and paragraph (2) of Article 8 of the Law No. 4389. 1.
The founders of a bank or any natural person and corporate body intending to
take over shares of a bank shall have an adequate financial capability which a
founder or a shareholder of a bank must have. Financial
capability shall be assessed based on such factors as:
a) provision of the necessary funds from legal
commercial, industrial and other activities, b)
assets composing the financial capability shall not have been acquired through
unregistered activities. 2.
The capital subscribed or the amount of shares to be taken over shall have been
provided free of any type of simulation. Applicants
shall disclose the source of funds they intend to use for their capital
subscriptions or assignment of shares beyond doubt where this is considered
necessary. 3.
Such natural persons and persons who are shareholders of corporate bodies shall
have the reputation which a bank owner is expected to have. Reputation
shall be assessed based on such factors as: a)
having a good character and being virtuous, b)
not having been involved in suspicious activities, c)
not have displayed a moral weakness in discharging his obligations, d)
having a reputable past. 4.
Applicants shall not: a)
have been declared bankrupt or made a composition with their creditors, b)
have, directly or indirectly, an interest more than ten percent in any banker,
bank, insurance company or any institution engaged in money and capital markets
which are being subjected to liquidation or any bank transferred to the Fund, c)
have, directly or indirectly, an interest more than ten percent interest or a
lesser interest which entitles him to appoint members to board directors or
board of auditors in any bank which is being subject to a legal proceeding
pursuant to Article 14 of the Banking Law, d)
have been punished with a heavy imprisonment or imprisonment over five years or
convicted of any infamous crime including simple or aggravated embezzlement,
extortion, bribery, theft, fraud, falsification, abuse of trust or smuggling
offenses other than smuggling of people and goods, conspiring in public
contracts and procurements and sales, money laundering or disclosing
Government's secrets, tax evasion or attempt to evade taxes or taking part in
any tax evasion attempt excluding negligent offences even if he has been
pardoned. 5.
Applicants shall provide any information and document, which may be required by
the Banking Regulation and Supervision Agency, in order to substantiate that
they meet the requirements set forth above. 6. Applicants who are citizens of a foreign country
shall be subject to requirements applicable to natural persons and corporate
bodies who are residents of Turkey. Whether any foreign applicant meets the
specified requirements shall be assessed based on information and opinions to be
received from competent authorities which issue licenses to carry out banking
operations and transactions on financial markets in its home country. §
Law on the privatization of three state-owned
commercial banks, namely T.C. Ziraat Bankası, T. Halk Bankası A.Ş. T. Emlak
Banksı A.Ş. The parliament passed a new Law concerning the T.C.
Ziraat Bankası, T. Halk Bankası AŞ, T. Emlak Bankası AŞ,
which aims ensuring the effective working of these banks in compatible
with the principle Savings Deposits Insurance Fund ples of international
competition and to strength their financial and administrative structure and to
make necessary preparations and arrangements for privatization process. The law envisages a restructuring and privatization
period of three years for these banks and also authorizes the Council of
Ministers to prolong this period by up to one-and-a-half years. Under the law, the state may not assign duties to any
of the three banks before physically providing the necessary funds. It further
states that the Treasury within the schedule outlined in the restructuring
program would meet duty losses of banks. Provisions of the law, which is to stay in effect
until the government stake in the banks is reduced to below 50 percent shall be
executed by the Council of Ministers. §
The BRSA announced its
action plan for the banks under the SDIF Banking Regulation and Supervision Agency (BRSA)
announced its action plan related to sale of shares of banks, management and
control of which were transferred to the Savings Deposit Insurance Fund (SDIF)
on November 17, 2000. 1.
Preparation of banks, management and shares of which have been transferred to
the Savings Deposits Insurance Fund, for sale; 1.1.
Completion of a review of financial conditions of the banks managed by the Fund,
preparation of their financial statements as of August 2000 when the SDIF was
transferred to the Banking Regulation and Supervision Agency (this process has
been completed.) 1.2
Assessment of quality of the banks' assets (this process has been completed.) 1.3)
Determination by the Banking Regulation and Supervision Board of types of assets
to be taken over by the Asset Management Unit created within the SDIF and
conditions for such transfer, 1.4)
Elimination of the banks' bad assets (exclusion of losses and bad debts from
their balance sheets) and determination of funds necessary for capital adequacy
ratio for each bank and for all the banks (this process has been completed). 1.5)
Implementation of the common management procedure adopted for addressing such
issues as rehabilitation of banks, an efficient use of resources, pursuing their
rights, receivables and litigations and ensuring their efficient management and
implementation of the action plan by all banks in an harmonious manner, and
application of decisions made by boards of directors of the Banking Regulation
and Supervision Board and the SDIF (this process has been completed). 2. Determination of requirements to be met by applicants who
intend to purchase shares of banks managed by the SDIF (this process has been
completed). 3.
Purchasing of Special Category State Public Borrowing Notes, which are needed to
improve financial conditions of banks and to be borrowed from the Treasury
Undersecretariat by determining conditions regarding their repayment, term, type
and interest rates (this process has been completed) 4.
Completion of investigations related to investors and review by investors of the
banks. 4.1.
Issuing invitations to potential buyers who will apply to the SDIF in order to
purchase shares of the banks and submission of their application forms to the
Agency (to be completed on December 15) 4.2
Approval by the Board of buyers who meet requirements laid down by the Board and
informing them of the result (to be completed on December 22). 4.3
Signing confidentiality agreements with investors who meet specified
requirements and permitting them to carry out reviews and inspections in banks
in which they are interested (to be completed in January 2001). 4.4
Receipt and evaluation of proposals submitted by organizations which have
performed required reviews (to be completed in February 2001) 5.
Preparation by the SDIF of tender specifications, release of tender notices (to
be completed in February 2001). 6.
Preparation by investors of their proposals by taking conditions set forth in
the specifications and obtaining all kinds of information relevant to the banks
and by also causing performance of a "due diligence" study where
deemed necessary and submission of these proposals to the Fund (to be completed
in the first week of April 2001). 7.
Evaluation of proposals and completion of bidding processes (to be completed by
the end of April 2001). 8.
Signing of sale agreements and transfer of shares. §
Amendment in the application of Reserve Requirement and Liquidity
Requirement Pursuant to the new amendments concerning the
application of reserve requirement and liquidity requirement,
the reserve requirement ratio for TL deposits is reduced by two
percentage points to 4 percent, and the liquidity requirement ratio for
non-deposit TL accounts of banks was decreased to 6 percent from 8 percent,
which shall be maintained as TL free deposits with the Central Bank. The legal requirement table including the latest
changes is given below. Reserve
Requirement Ratio (RR) and Liquidity Ratio (LR)
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