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					1-entry
1.1 Licensing authority 1.2 Number of banks 1.3 Minimum capital entry requirement 1.4 Is information on source of funds for capital required? 1.5 Are the sources of funds to be used as capital verified by authorities? 1.5.1 Are law enforcement authorities consulted? 1.6 Can assets other than cash/govt. securities be used to increase capital? 1.7 Can borrowed funds be used? 1.8 Legal submissions required for banking license: 1.8.1 Draft by-laws 1.8.2 Intended organization chart 1.8.3 First 3-year financial projections 1.8.4 Financial information on shareholders 1.8.5 Background/experience of future directors 1.8.6 Background/experience of future managers 1.8.7 Sources of funds in capitalization of new bank 1.8.8 Intended market differentiation of new bank 1.9 Number of domestic applications for banking licenses 1.9.1 Number denied 1.10 Number of foreign applications for banking licenses 1.10.1 Number denied 1.11 Basis for denial of appilications 1.11.1 Capital amount/quality 1.11.2 Banking skills 1.11.3 Reputation 1.11.4 Incomplete application

Turkey Council of Ministers & the Treasury 62 TL 20,000,000 no no no yes no yes yes yes yes yes

yes

no yes

2-ownership
2.1 Is there a maximum percentage of capital that can be owned by single owner? 2.1.1 If yes, what is it? 2.2 Can related parties own capital in a bank? 2.2.1 If yes, what is the maximum percentage? 2.3 Regulatory restrictiveness of ownership by nonfinancial firms of banks 2.4 Fraction of capital in 10 largest banks owned by conglomerates 2.5 Can non-bank financial firms own shares in banks? 2.5.1 What are the limits? 2.6 What is the 5-bank concentration ratio (%)?

Turkey yes Ownership beyond 10% requires prior approval yes none unrestricted 67.1% (as of July 1999) yes none 50 (as of july 99)

3-capital
3.1 Minimum capital-asset ratio requirement (%) 3.1.1 Is it risk-weighted in line with Basle guidelines? 3.2 Does the ratio vary with a bank's credit risk? 3.3 Does the ratio vary with market risk? 3.4 Actual risk-adjusted capital ratio (%) 3.5 Is subordinated debt allowable (required) as part of capital? 3.6 What fraction of revaluation gains is allowed as part of capital? 3.7 Percentage of banking system's assets in banks that are 50% or more government owned 3.8 Percentage of banking system's assets in banks that are 50% or more foreign owned 3.9 Before minimum capital adequacy is determined, which items are deducted from capital

Turkey 8 yes yes yes 12.03 (as of Mar 99) yes not reported 35 (as of July 99) 6.6 (as of July 99) 3.9.1 Market value of loan losses 3.9.2 Unrealized securities losses 3.9.3 Unrealized foreign exchange losses no no no Turkey restricted permitted prohibited restricted Turkey yes yes yes yes yes yes yes no yes no Turkey no no

4-Activities
4.1 Securities 4.2 Insurance 4.3 Real estate 4.4 Regulatory restrictiveness of bank ownership of nonfinancial firms

5 & 6 -audit,management,org
5.1 Is an external audit compulsory? 5.2 Are there specific requirements for the extent of audit ? 5.3 Are auditors licensed or certified? 5.4 Is auditor's report given to supervisory agency? 5.5 Can supervisors meet external auditors to discuss report without bank approval? 5.6 Are auditors legally required to report misconduct by managers/directors to supervisory agency? 5.7 Can legal action against external auditors be taken by supervisor for negligence? 5.8 Has legal action been taken against an auditor in last 5 years? 6.1 Can supervisors force banks to change internal organizational structure? 6.2 Has this power been utilized in last 5 years?

7-liquidity
7.1 Are there guidelines for asset diversification? 7.2 Are banks prohibited from making loans abroad?

7.3 Minimum liquidity requirement (%)

4% for TL deposits and 1% for forex deposits to be held in the form of govt. paper; 2% for both TL and forex deposits to be held as cash in vault; For TL liabilities other than deposits, 8% liquidity has to be held in the form of free deposits and 4% as govt. paper and 2% as cash in vault. For forex liabilities other than deposits 11% has to be held in the form of free deposits and 1% in the form of govt. paper and 2% as cash in vault.

7.4 What interest is paid on reserves?

not remenerated; only income from holding govt. paper 8% for local currency depostis; for Forex, its 11%. not remunerated Cash in vault, govt paper and free deposits to be held at the Central Bank Turkey yes both 0.012 There is no limit per account since 1994 no (there is no limit per person since yes994) no Minister of Finance

Minimum reserve requirement (%)

How is reserve requiremement renumerated 7.5 What assets satisfy liquidity or reserve requirements?

8-depositor
8.1 Is there an explicit deposit insurance scheme? 8.1.1 Is it funded by the government, banks or both? 8.1.2 Ratio of accummulated funds to total bank assets 8.1.3 Insurance limit per account 8.1.4 Is there a limit per person? 8.1.4.1 Amount of limit 8.1.5 Does deposit insurance authority make the decision to intervene a bank? 8.1.6 If no, who does? 8.1.7 If yes, does the deposit insurance authority have the legal power to intervene/takeover a troubled (not insolvent) bank? 8.2 As a share of total assets, value of denominated debt liabilities not covered by explict/implicit savings protection scheme? 8.3 Number of banks merged/closed (as part of failure resolution) in last 5 years 8.4 Were depositors wholly compensated the last time a bank failed? 8.4.1 Average time to pay depositors in full 8.4.2 Longest that depositors waited in last 5 years 8.5 Were any deposits that were not covered at the time of failure compensated when bank failed? 8.6 Can deposit insurance agency take legal action against bank directors/officials?

0.336

3 no 6 months 6 months no no

8.7 Has the deposit insurance agency ever taken any legal action against bank directors/officials?

9-provisioning
9.1 Is there a formal definition of "non-performing loan"? 9.1.1 If yes, what is it? 9.2 Classification of loans in arrears: 9.2.1 Substandard 9.2.2 Doubtful 9.2.3 Loss 9.3 Minimum required provisioning of loans as they become: 9.3.1 substandard 9.3.2 doubtful 9.3.3 loss 9.4 Other classification systems

Turkey no

Debtor of default occurs when two consequently monthly installments are not paid or one of the installments is not paid within 60 days following the maturity date. Tthe quality of collateral is taken into account to determine provisioning requirements 0.021 (net past due loans of the banking sector as of July 1999) no Turkey yes yes 90 yes yes yes no yes no no 70

9.5 Ratio of non-performing loans to total assets (%)

9.6 If one loan is non-performing, are other loans of a multiple-loan customer classified as non-performing?

10-disclosure
10.1 Does income statement contain accrued but unpaid interest/principal while loan is performing? 10.1.1 Does income statement contain accrued but unpaid interest/principal while loan is non-performing? 10.2 Number of days in arrears after which interest income cease to accrue 10.3 Are consolidated accounts covering bank and any nonbank financial subsidiaries required? 10.4 Are off-balance sheet items disclosed to supervisors? 10.4.1 Are off-balance sheet items disclosed to public? 10.5 Must banks disclose risk management procedures to public? 10.6 Are directors legally liable for erroneous/misleading information? 10.6.1 Have penalties been enforced? 10.7 Do regulations require credit ratings for commercial banks? 10.7.1 What percentage of top ten banks is rated by international credit rating agencies? 10.7.2 What percentage of the top ten banks are rated by domestic credit rating agencies? 10.7.3 Which bank activities are rated?

10.7.3.1 bonds 10.7.3.2 commercial paper 10.7.3.3 other

yes yes yes Turkey

11-discipline

11.1 Are there any mechanisms of cease-desist type orders whose infraction leads to automatic imposition of civil & penal sanctions on banks directors & managers? 11.2 Can the supervisory agency order directors/management to constitute provisions to cover actual/potential losses? 11.3 Can the supervisory agency suspend director's decision to distribute: 11.3.1 dividends 11.3.2 bonuses 11.3.3 management fees 11.4 Any such actions taken in last 5 years? 11.5 Which laws address bank insolvency? 11.6 Can the supervisory agency supercede bank shareholder rights and declare bank insolvent? 11.7 Does banking law allow supervisoy agency to suspend some or all ownership rights of a problem bank? 11.8 Does the law establish pre-determined levels of solvency deterioration which forces automatic actions such as intervention? 11.9 Regarding bank restructuring & reorganization, can supervisory agency or any other govt. agency do the following:

no

yes

no no no yes Banks Act yes yes

no

11.9.1 supercede shareholder yes rights 11.9.2 remove and replace management 11.9.3 remove and replace directors 11.9.4 forbear certain prudential regulations 11.9.5 insure liabilities beyond any explicit deposit insurance scheme yes yes yes no

11.10 Number of banks closed in last 5 years 11.10.1 Percentage of total bank assets accounted for by these banks

3 0.0042 Turkey Central Bank and Treasury conduct supervisory operations. The Banks' Regulatory and Supervisory Agency which will begin operation from Sept. 2000 yes Ministry of Finance Board of Ministers Governor can be excused upon violations of rules of his office, and when there is no longer any possibility for him to perform the duties assigned by law (vague answer?) none

12-supervision
12.1 Bank Supervision Authority

12.1.1 Is there more than one supervisory body? 12.2 To whom are supervisors accountable? 12.2.1 How is head of supervisory agency/other directors appointed? 12.2.2 How is head of supervisory agency/other directors removed?

12.3 Any important differences between expectations from supervisory agency and what is mandated by law?

12.4 Total number of professional bank supervisors 12.4.1 Number of professional bank supervisors per institution 12.5 Numbe of onsite examinations per bank in last 5 years 12.6 Total budget for supervision 12.7 Frequency of onsite inspections conducted in large & medium size banks (annually=1; every two years =2) 12.8 Average tenure of a supervisor (years) 12.9 frequency of supervisors employed by banking industry subsequent to retirement (never=0, rarely=1, occasionally=2; frequently=3) 12.10 Must infraction of any prudential regulation found by a supervisor be reported? 12.11 Any mandatory actions in these cases? 12.12 Who authorizes exceptions to such actions? 12.13 Number of exceptions granted last year 12.14 Are supervisors legally liable for their actions?

25 0.4 not reported Not reported Whenever there is a need based on off-site inspection not reported 2

yes yes no exceptions 0 no


				
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