Fiba Holding A._. and its Affiliates Consolidated Financial

Document Sample
Fiba Holding A._. and its Affiliates Consolidated Financial Powered By Docstoc
					Fiba Holding A.Ş. and its Affiliates



Consolidated Financial Statements
    As of 31 December 2005
With Independent Auditor’s Report




  Akis Serbest Muhasebeci
  Mali Müşavirlik Anonim Şirketi
  31 May 2006
  This report includes 1 pages of report from
  independent auditors and 67 pages of
  financial statements together with their
  explanatory notes
 Fiba Holding A.Ş. and its Affiliates




Table of Contents

Independent Auditor’s Report

Consolidated Statement of Income
Consolidated Statement of Recognized Income and Expense
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Fiba Holding A.Ş. and its Affiliates
Consolidated Statement of Income
For the Year Ended 31 December 2005
In thousand of New Turkish Lira ("YTL") as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29



                                                                   Notes               2005                   2004


Revenues                                                                               2,717,969             1,990,889
Cost of revenues                                                                      (1,150,334)            (844,174)
Gross profit                                                         2                  1,567,635            1,146,715

General and administrative expenses                                  3                  (721,061)            (571,683)
Impairment losses, net                                               4                  (114,903)             (91,171)
Other operating income, net                                          5                    10,547               76,522
Profit from operations                                                                    742,218              560,383

Net financing income/(costs)                                         6                   (12,963)             (22,274)
Other income and expenses, net                                                            17,439               16,179
Profit before gain on net monetary position                                               746,694              554,288

Loss on net monetary position, net                                                       (39,878)             (89,548)
Profit before tax                                                                         706,816              464,740

Taxation charge                                                      7                  (202,254)            (113,112)
Net profit for the year                                                                   504,562              351,628

Attributable to:
Equity holders of the parent                                                             126,673              150,115
Minority interest                                                   17                   377,889              201,513
Net profit for the year                                                                   504,562              351,628




                    The accompanying notes are the integral part of this consolidated financial statement.




                                                                     2
Fiba Holding A.Ş. and its Affiliates
Consolidated Statement of Recognized Income and Expense
For the Year Ended 31 December 2005
In thousands of New Turkish Lira ("YTL") as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29



                                                        Notes                          2005                2004


Currency translation difference                           17                        (48,787)            (53,915)
Unrealized gain in available-for-sale investments         17                         11,294              21,866
Property revaluation surplus                              17                         (2,883)             (5,029)
Net loss recognised directly in equity                                              (40,376)            (37,078)

Net profit for the year                                                             504,562             351,628
Total recognised income for the year                                                464,186             314,550

Attributable to :
Equity holders of the parent                                                        115,416             134,303
Minority interest                                                                   348,770             180,247
Total recognised income for the year                                                464,186             314,550




               The accompanying notes are the integral part of this consolidated financial statement.




                                                           3
Fiba Holding A.Ş. and its affiliates
Consolidated Balance Sheet as of 31 December 2005
In thousand of New Turkish Lira ("YTL") as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29

                                                                       Notes
Assets
Tangible assets, net                                                     8            311,066                285,208
Intangible assets, net                                                   9             38,349                 45,431
Investment property                                                     10             35,544                 28,782
Investments in debt securities                                          11          2,725,247              1,565,240
Investments in equity securities                                                       18,887                 58,390
Banking loans and advances                                              14          3,614,495              2,148,135
Other non-current assets                                                                6,946                  2,330
Deferred tax assets                                                      7                511                 40,331
Total non-current assets                                                            6,751,045              4,173,847
Accounts receivable, net                                                12            144,252                122,227
Due from related parties                                                28             53,172                 16,503
Other current assets                                                    13            129,279                 87,492
Banking loans and advances                                              14          8,139,264              6,887,981
Financial assets at fair value through profit or los                    15            236,882                106,415
Derivative financial instruments                                        24             36,234                226,968
Reserve deposits at Cenral Bank                                         16            954,649                788,117
Other money market placements                                           16              8,676                 21,927
Deposits with other banks and financial institution                     16          1,392,431              1,428,843
Cash and cash equivalents                                               16            127,610                108,314
Total current assets                                                               11,222,449              9,794,787
Total assets                                                                       17,973,494             13,968,634

Shareholders' equity
Share capital                                                                         350,000                 40,000
Adjustment to share capital                                                             5,495                 76,568
Unrealized gain in available-for-sale investments                                      20,705                 20,232
Property revaluation surplus                                                            2,202                  4,045
Retained earnings and other reserves                                                  180,225                319,042
Total shareholders' equity attributable to equity holders of the
parent                                                                                558,627                459,887
Minority interest                                                                   1,135,072                747,655
Total shareholders' equity                                              17          1,693,699              1,207,542
Liabilities
Long-term borrowings                                                    18            445,957                 47,956
Debt securities                                                         19          1,442,776                555,558
Subordinated debt securities                                            19            364,721                279,406
Provisions                                                              20             55,365                 41,020
Deferred tax liabilities                                                 7             33,453                 23,099
Other non-current liabilities                                                               --                 8,709
Total non-current liabilities                                                       2,342,272                955,748
Short-term bank borrowings                                              21          2,466,995              1,204,748
Short-term portion of long-term borrowings                              18            318,098                190,255
Deposits                                                                22         10,186,728              9,494,730
Obligations under repurchase agreements                                 23            128,984                214,682
Derivative financial instruments                                        24            228,851                100,388
Due to related parties                                                  28             26,992                      --
Taxes payable on income                                                  7             28,945                 73,237
Accounts payable and other current liabilities                          25            551,930                527,304
Total current liabilities                                                          13,937,523             11,805,344
Total liabilities                                                                  16,279,795             12,761,092
Total shareholders' equity and liabilities                                         17,973,494             13,968,634

                 The accompanying notes are the integral part of this consolidated financial statement.
                                                                   4
Fiba Holding A.Ş. and its affiliates
Consolidated Statement of Cash Flows
For the Year Ended 31 December 2005
In thousand of New Turkish Lira ("YTL") as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29

                                                                      Notes                      2005                 2004
Cash flows from operating activities:
  Net profit for the year                                                                     504,562             351,628
Components of net profit not generating or using cash:
  Impairment losses                                                     4                     114,903              91,171
  Exchange differences on tangible assets                               8                      13,517              10,990
  Provision for severance payment                                       1                         907               2,883
  Depreciation and amortization                                         3                      56,054              63,247
  Technical reserves relating to insurance operations                   1                      66,325              50,478
  Provision for credit card bonus payments                              20                      3,162                   --
  Other provisions                                                      1                       3,415               2,313
  Share of profit of associates                                         5                     (19,949)              9,530
  Change in accrued interest expense/(income), net                      1                      14,562               8,001
  Provision for taxes on income                                         7                     143,715             131,314
  Deferred tax (credit)/charge                                          7                      58,539             (18,202)
  Effect of inflation on monetary items                                                        (9,679)            (39,223)
Changes in operating assets and liabilities:
  Banking deposits                                                                            691,988              836,889
  Banking loans and advances                                                               (2,805,918)          (1,773,627)
  Balances with the Central Bank                                                             (166,532)             138,556
  Derivative financial instruments                                                            319,197              (67,248)
  Financial assets through profit or loss                                                    (130,467)             (58,640)
  Other assets                                                                                (46,403)              18,528
  Accounts receivable                                                                         (24,497)             (12,244)
  Due from related parties                                                                    (36,669)              15,629
  Obligations under repurchase agreements                                                     (85,698)             190,016
  Accounts payable and other current liabilities                                               10,064               83,947
  Due to related parties                                                                       26,992                    --
  Other liabilities and provisions                                                            (64,758)              (2,602)
  Taxes paid                                                                                 (193,937)             (70,283)
Cash flows used in operating activities                                                    (1,556,605)             (36,949)
Investing activities
  Proceeds from sales of investments in equity securities                                      59,452               4,997
  Increase in investments in debt securities                                               (1,160,007)             80,919
  Additions to tangible assets                                                               (111,755)            (75,151)
  Acquisition of intangible assets                                                            (10,004)            (10,436)
  Acquisition of investment property                                                           (4,612)                  --
  Proceeds from sales of tangible assets                                                       14,887              10,795
  Proceeds from sales of intangible assets                                                      6,560                   --
  Proceeds from sales of investment property                                                    9,569                   --
  Dividends paid                                                        17                    (16,676)            (13,873)
Cash flows (used in)/provided by investing activities                                      (1,212,586)             (2,749)
Financing activities
  Increase in short-term bank borrowings, net                                               1,390,090             152,716
  Debt securities and subordinated debt securities                                            972,533             834,964
  Increase/(decrease) in long-term bank borrowings, net                                       398,001            (293,937)
Cash flows provided by financing activities                                                 2,760,624             693,743
Net decrease in cash and cash equivalents                                                      (8,567)            654,045
  Cash and cash equivalents at 1 January                                16                  1,475,961             821,916
Cash and cash equivalents at 31 December                                16                  1,467,394           1,475,961




                       The accompanying notes are the integral part of this consolidated financial statement.




                                                                  5
      Fiba Holding A.Ş. and its Affiliates
      Notes to the Consolidated Financial Statements
      As of and For the Year Ended 31 December 2005
      In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
      in YTL units current at 31 December 2005 pursuant to IAS 29
      History and activities
      Fiba Holding A.Ş. (“Fiba Holding”) was established in 1989 to invest in and coordinate the activities
      of its companies operating in financial sector including banking, insurance, leasing, asset management,
      brokerage services and factoring.
      Fiba Holding is owned and managed by Özyeğin Family members. As of 31 December 2005 Fiba
      Holding has 22 (2004: 17) affiliates (“Affiliates”) and 2 (2004: 2) associates (“Associates”) (together
      referred to as “the Group” or “Fiba Group” herein and after). As explained in more detail in note 30,
      Fiba Holding holds controlling interest directly or indirectly via other companies owned and/or
      exercising the control over the voting rights of the shares held by the members of Özyeğin Family, in
      all its affiliates included in the Group.
      The address of the registered office and head office of Fiba Holding is as follows:
      Registered office: Büyükdere Caddesi No 129/5 Gayrettepe İstanbul Turkey
      Head office: Büyükdere Caddesi No 173 Levent Plaza Floor 9 34330 İstanbul Turkey
      The number of employees of the Group at 31 December 2005 is 11.201 (2004: 8.191).

      Significant accounting policies
(a)   Statement of compliance
      Fiba Group entities operating in Turkey maintain their books of account and prepare their statutory
      financial statements in New Turkish Lira (“YTL”) in accordance with the Accounting Practice
      Regulations as promulgated by the Banking Regulatory and Supervision Agency (“BRSA”) applicable
      to the banks, and accounting principles per Turkish Uniform Chart of Accounts and per Capital Market
      Board of Turkey applicable to entities operating other than banking sector.
      Fiba Group’s foreign entities maintain their books of account and prepare their statutory financial
      statements in accordance with the related legislation and generally accepted accounting principles
      applicable in the countries they operate.
      The accompanying consolidated financial statements are based on these statutory records with
      adjustments and reclassifications for the purpose of fair presentation in accordance with International
      Financial Reporting Standards (“IFRS”), and its interpretations adopted by the International
      Accounting Standards Board (“IASB”). Such adjustments mainly comprise effects of restatement for
      the changes in the general purchasing power of YTL, accounting for leasing transactions, impairment
      of assets if any, deferred taxation, employee termination benefits, consolidation of affiliates. These are
      the Group’s first consolidated financial statements and IFRS 1 “First-time Adoption of IFRS” has been
      applied.

(b)   Basis of preparation
      The accompanying consolidated financial statements are presented in YTL rounded to the nearest
      thousand as adjusted for the effects of inflation in YTL unit current at 31 December 2005, pursuant to
      IAS 29 “Financial Reporting in Hyperinflationary Economies”.


                                                          6
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




           Significant accounting policies (continued)
           The financial statements are prepared on the historical cost basis except that the following assets and
           liabilities are stated at their fair values if reliable measures are available: derivative financial
           instruments, financial assets and liabilities at fair value through profit or loss, financial instruments
           classified as available-for-sale.
           The preparation of financial statements in conformity with IFRSs requires management to make
           judgements, estimates and assumptions that affect the application of policies and reported amounts of
           assets and liabilities, income and expenses. The estimates and associated assumptions are based on
           historical experience and various other factors that are believed to be reasonable under the
           circumstances, the results of which form the basis of making the judgements about carrying values of
           assets and liabilities that are not readily apparent from other sources. Actual results may differ from
           these estimates.
           The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
           estimates are recognised in the period in which the estimate is revised if the revision affects only that
           period, or in the period of the revision and future periods if the revision affects both current and future
           periods.
           The accounting policies set out below have been applied consistently to all periods presented in these
           consolidated financial statements and in preparing an opening IFRS balance sheet at 1 January 2004
           for the purposes of the transition to IFRS.
           The accounting policies have been applied consistently by Group entities.
           The areas involving a higher degree of judgment or complexity that are significant to the consolidated
           financial statements are disclosed in the related accounting policies.

   (c)     Basis of consolidation
           The accompanying consolidated financial statements include the accounts of the parent company, Fiba
           Holding, its affiliates and associates on the basis set out in sections below. The financial statements of
           the entities included in the consolidation have been prepared as of the date of the consolidated financial
           statements.
   (i)     Affiliates
           Affiliates are those enterprises controlled by the Group. Control exists when the Group has the power,
           directly or indirectly, to govern the financial and operating policies of an enterprise so as to obtain
           benefits from its activities. In assessing control, potential voting rights that presently are exercisable or
           convertible are taken into account. The financial statements of affiliates are included in the
           consolidated financial statements from the date that control commences until the date that control
           ceases.
   (ii)    Associates
           The Group’s investments in associates are accounted for under the equity method of accounting. These
           are entities in which the Group has significant influence but not control and which are neither
           subsidiaries nor joint ventures of the Group. The investments in associates are carried in the balance
           sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associates, less any
           impairment in value. The income statement reflects the Group’s share of the results of operations of the
           associates. Where there has been a change recognized directly in the equity of an associate, the Group
           recognizes its share of any changes and discloses this when applicable, in the statement of changes in
           equity.



                                                                       7
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




           Significant accounting policies (continued)
           The reporting dates of the associate and the Group are identical and the associates’ accounting policies
           conform to those by the Group for like transactions and events.
   (iii) Transactions eliminated on consolidation
         Intragroup balances and any unrealised gains and losses or income and expenses arising from
         intragroup transactions, are eliminated in preparing the consolidated financial statements.
           Unrealised gains arising from transactions with associates are eliminated to the extent of the Group’s
           interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to
           the extent that there is no evidence of impairment.

   (d)     Accounting in hyperinflationary economies
           The financial statements of the Turkish Affiliates as at 31 December 2005 were restated for the
           changes in the general purchasing power of the YTL based on IAS 29. IAS 29 requires that financial
           statements prepared in the currency of a hyperinflationary economy be stated in terms of the measuring
           unit current at the balance sheet date, and that corresponding figures for previous periods be restated in
           the same terms. One characteristic that necessitates the application of IAS 29 is a cumulative three-
           year inflation rate approaching or exceeding 100%.
           Three years inflation rate in Turkey has been 35.6% as at 31 December 2005, based on the Turkish
           nation-wide wholesale price indices announced by the Turkish Institute of Statistics (“TIS”). Although
           this rate is below the 100% threshold as of 31 December 2005, hyperinflation is indicated by
           characteristics of the economic environment of a country which includes, but is not limited to the
           following;
                •    The general population prefers to keep its wealth in non-monetary assets or in a relatively
                     stable foreign currency,
                •    Amounts of local currency held are immediately invested to maintain purchasing power,
                •    The general population regards monetary amounts not in terms of the local currency but in
                     terms of a relatively stable foreign currency,
                •    Sales and purchases on credit take place at prices that compensate for the expected loss of
                     purchasing power during the credit period, even if the period is short,
                •    Interest rates, wages and prices are linked to a price index.
           Such indicators of hyperinflation are still valid in Turkey. Consequently, the financial statements of the
           entities located in Turkey are restated for the changes in the general purchasing power of YTL as at 31
           December 2005 based on IAS 29. The restatement was calculated by means of conversion factors
           derived from the Turkish countrywide wholesale price index published by the TIS.
           Such recent indices and conversion factors used to restate the accompanying consolidated financial
           statements are given below:
           Date                                           Index                     Conversion factor
           31 December 2005                    8,785.74                                   1.000
           31 December 2004                    8,403.80                                   1.045
           31 December 2003                    7,382.10                                   1.190
           The main procedures for the application of IAS 29 are as follows:
                     Financial statements prepared in the currency of a hyperinflationary economy are stated in
                     terms of the measuring unit current at the balance sheet date, and corresponding figures for
                     previous periods are restated in the same terms.




                                                                       8
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




           Significant accounting policies (continued)
                     Monetary assets and liabilities, which are carried at amounts current at the balance sheet date
                     are not restated because they are already expressed in terms of the monetary unit current at the
                     balance sheet date.
                     Non-monetary assets and liabilities that are not carried at amounts current at the balance sheet
                     date, and components of shareholders’ equity are restated by applying the relevant (monthly,
                     yearly average, year end) conversion factors. Additions to tangible assets in the year of
                     acquisition are restated using the relevant conversion factors.
                     All items in the consolidated statement of income are restated by applying the monthly
                     conversion factors except for those amounts deriving from non-monetary items, which are
                     calculated, based on the restated values of the related items.
                     The effect of general inflation on the consolidated entities’ net monetary position is included in
                     the consolidated statement of income as “Loss on net monetary position, net”.

   (e)     Foreign currency
   (i)     Foreign currency transactions
           Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the
           transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet are
           translated to YTL at the foreign exchange rates ruling at that date. Foreign exchange differences
           arising on translation are recognized in the consolidated statement of income. Non-monetary assets and
           liabilities that are measured in terms of historical cost in foreign currency are translated using the
           exchange rate at the date of transaction. Non-monetary assets and liabilities denominated in foreign
           currencies that are stated at fair value are translated to the reporting currency at the foreign exchange
           rates ruling at the dates that the fair values were determined, and restated to the balance sheet date for
           the effects of inflation.
   (ii)    Financial statements of foreign operations
           The assets and liabilities of foreign subsidiaries (none of which has the currency of a hyperinflationary
           economy) are translated into the presentation currency of the Group (YTL) at the rate of exchange
           ruling at the balance sheet date. The income statements of foreign subsidiaries are translated at the
           weighted average exchange rates for the year and restated to the year end purchasing power of YTL.
           Exchange differences arising from the translation of the net investment in foreign entities are included
           in equity as currency translation differences until the disposal of the net investment.
           On disposal of a foreign entity, the deferred cumulative amount recognized in equity relating to that
           particular foreign operation is recognized in the income statement as a component of the gain or loss
           on disposal.

   (f)     Derivative financial instruments
           The Group enters into transactions with derivative instruments including forwards, swaps, options and
           futures in the foreign exchange and capital markets. The Group also has swaption agreements and
           credit default swaps. Derivative financial instruments are initially recognized at fair value on the date
           which a derivative contract is entered into and subsequently remeasured at fair value.
           Fair values are obtained from quoted market prices in active markets, including recent market
           transactions, to the extent publicly available, and valuation techniques, including discounted cash flow
           models and options pricing models as appropriate. All derivatives are carried as assets when fair value
           is positive and as liabilities when fair value is negative.




                                                                       9
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




           Significant accounting policies (continued)
           Certain derivatives embedded in other financial instruments are treated as separate derivatives when
           their economic characteristics and risks are not closely related to those of the host contract and the host
           contract is not carried at fair value with fair value changes reflected in income statement. The Group
           treats the entire combined contract as a financial asset or financial liability that is held for trading when
           it is unable to measure the embedded derivative separately either at acquisition or at a subsequent
           financial reporting date.
           The method of recognizing the resulting fair value gain or loss depends on whether the derivative is
           designated as a hedging instrument, and if so, the nature of the item being hedged. Swap transactions
           that are designated as hedging instruments for fair value hedges are accounted for in accordance with
           hedge accounting policies provided certain criteria are met. Other derivative financial instruments that
           are considered as effective economic hedges under the Group’s risk management policies but do not
           qualify for hedge accounting under the specific provisions of IAS 39 “Financial Instruments:
           Recognition and Measurement” are treated as derivatives held for trading and any gains or losses
           arising from changes in fair value are recognized in consolidated statement of income.
           The Group documents, at the inception of the transaction, the relationship between hedging
           instruments and hedged items, as well as its risk management objective and strategy for undertaking
           various hedge transactions. The Group also documents its assessment, both at hedge inception and on
           an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective
           in offsetting changes in fair values of hedged items.
           In the fair value hedge, changes in the fair value of derivatives (swaps) that are designated and qualify
           as fair value hedges are recorded in the income statement together with any changes in the fair value of
           the hedged asset (portfolio of long term fixed interest loans) that are attributable to the hedged risk.
           The Group discontinues fair value hedge accounting prospectively if the hedging instrument expires or
           is sold, terminated or exercised or if the hedge no longer meets the criteria for hedge accounting or if
           the entity revokes the designation.
           For fair value hedges relating to items carried at amortized cost, the adjustment to the carrying value is
           amortized through profit and loss over the remaining term to maturity. Amortization begins no later
           than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk
           being hedged.

   (g)     Investments and other financial assets
           The Group classifies its financial assets in the following categories: financial assets at fair value
           through profit or loss; loans and receivables; held-to-maturity investments and available-for-sale
           financial assets. When financial assets are recognized initially, they are measured at fair value. The
           Group determines the classification of its financial assets at initial recognition.
           All regular way purchases and sales of financial assets are recognized on the settlement date i.e. the
           date that the asset is delivered to or by the Group. Regular way purchases or sales are purchases or
           sales of financial assets that require delivery of assets within the time frame generally established by
           regulation or convention in the market place. Changes in fair value of assets to be received during the
           period between the trade date and the settlement date are accounted for in the same way as the acquired
           assets i.e. for assets carried at cost or amortized cost, change in value is not recognized; for assets
           classified as at fair value through profit or loss or as available for sale, the change in value is
           recognized through profit or loss and in equity, respectively.




                                                                      10
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




           Significant accounting policies (continued)
           Financial assets at fair value through profit or loss
           Financial assets classified as held for trading are included in this category. Trading securities are
           securities, which were either acquired for generating a profit from short term fluctuations in price or
           dealer’s margin, or are securities included in a portfolio in which a pattern of short term profit taking
           exist. Derivatives are also classified as held for trading unless they are designated and effective
           hedging instruments. Gains or losses on investments held for trading are recognized in consolidated
           statement of income.
           Loans and receivables:
           Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
           not quoted in an active market. They arise when the Group provides money, goods or services directly
           to a debtor with no intention of trading the receivable. Such assets are carried at amortized cost using
           the effective interest method less any impairment in value. Gains and losses are recognized in
           consolidated statement of income when the loans and receivables are derecognised or impaired, as well
           as through the amortization process. Interest earned on such loans and receivables is reported as
           interest income.
           Debt securities that are purchased from the government at original issuance and that are not quoted in
           an active market are also classified as loans and receivables and carried at amortized cost using the
           effective yield method less any impairment in value. Interest earned on such securities is reported as
           interest income.
           Held-to-maturity investments
           Non-derivative financial assets with fixed or determinable payments and fixed maturity where
           management has both the intent and the ability to hold to maturity are classified as held-to-maturity.
           Investments intended to be held for an undefined period are not included in this classification. Where
           the Group to sell other than an insignificant amount of held-to-maturity assets, the entire category
           would be tainted and reclassified as available for sale.
           Held-to-maturity investments are subsequently measured at amortized cost using the effective interest
           method, less any impairment in value. Amortized cost is calculated by taking into account all fees paid
           or received between parties to the contract that are an integral part of the effective interest rate,
           transaction costs and all other premiums or discounts. For investments carried at amortized cost, gains
           and losses are recognized in the consolidated statement of income when the investments are
           derecognised or impaired, as well as through the amortization process.
           Interest earned whilst holding held to maturity securities is reported as interest income.
           In 2004, the Group has sold more than an insignificant amount of securities included in the held to
           maturity portfolio before their maturity and accordingly the Group has reclassified all securities in the
           held to maturity portfolio to securities available for sale. The Group will not be able to classify any
           financial assets as held to maturity for the current year and for the following financial year.




                                                                      11
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




           Significant accounting policies (continued)
           Available-for-sale financial assets
           Available for sale financial assets are those non-derivative financial assets that are designated as
           available-for-sale or are not classified in any of the three preceding categories. After initial recognition,
           available for sale financial assets are measured at fair value. Gains or losses on remeasurement to fair
           value are recognized as a separate component of equity until the investment is derecognized, or until
           the investment is determined to be impaired, at which time the cumulative gain or loss previously
           reported in equity is included in the consolidated statement of income. However, interest calculated on
           available for sale financial assets using effective interest method is reported as interest income, and
           dividends are included in dividend income when the entity’s right to receive payment is established.
           For investments that are traded in an active market, fair value is determined by reference to stock
           exchange or current market bid prices, at the close of business on the balance sheet date. For
           investments where there is no market price or market price is not indicative of the fair value of the
           instrument, fair value is determined by reference to the current market value of another instrument
           which is substantially the same, recent arm's length transactions, discounted cash flow analysis, option
           pricing models and other valuation techniques commonly used. Equity securities whose fair values
           cannot be measured reliably are recognized at cost less impairment.
   (i)     Specific instruments
           Cash and cash equivalents: Cash and cash equivalents comprise cash balances on hand, cash deposited
           with Central Banks, demand deposits at domestic and foreign banks and short-term highly liquid
           investments with maturities of three months or less when purchased. Money market placements are
           classified under “Other money market placements” as loans and receivables.
           Loans and advances to banks and customers: Loans and advances provided by the banking and leasing
           segment of the Group are classified as “Banking loans and advances”, and reported net of allowances
           to reflect the estimated recoverable amounts.
           Accounts receivable: Accounts receivable are stated at their cost, less impairment losses.
           Accounts payable: Accounts payable are stated at their cost.

   (h)     Recognition and derecognition of financial instruments
           The Group recognizes a financial asset or financial liability in its balance sheet when and only when it
           becomes a party to the contractual provisions of the instrument.

           The Group derecognizes a financial asset (or, where applicable a part of a financial asset or part of a
           group of similar financial assets) when:
                •    the rights to receive cash flows from the asset have expired;
                •    the Group retains the right to receive cash flows from the asset , but has assumed an obligation
                     to pay them in full without material delay to a third party under a “pass-through” arrangement;
                     or
                •    the Group has transferred its rights to receive cash flows from the asset and either has
                     transferred substantially all the risks and rewards of the asset, or has transferred control of the
                     asset.




                                                                      12
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




           Significant accounting policies (continued)
           Where the Group has transferred its rights to receive cash flows from an asset and has neither
           transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the
           asset, the asset is recognized to the extent of the Group’s continuing involvement in the asset.
           Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the
           lower of the original carrying amount of the asset and the maximum amount of the consideration that
           the Group could be required to repay.

           The Group derecognizes a financial liability when the obligation under the liability is discharged or
           cancelled or expires.

           When an existing liability is replaced by another from the same lender on substantially different terms,
           or the terms of an existing liability are substantially modified, such an exchange or modification is
           treated as a derecognition of the original liability and the recognition of a new liability, and the
           difference in the respective carrying amounts is recognized in profit or loss.

   (i)     Tangible assets and related depreciation
   (i)     Owned assets
           The costs of the tangible assets are restated for the effects of inflation in YTL units current at the
           balance sheet date pursuant to IAS 29. Accordingly, tangible assets are carried at restated costs
           excluding the costs of day-to-day servicing, less accumulated depreciation and impairment losses (see
           accounting policy o):
   (ii)    Leased assets
           Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are
           classified as financial leases. The owner-occupied property acquired by way of finance lease is stated
           at an amount equal to the lower of its fair value and the present value of the minimum lease payment at
           inception of the lease, less accumulated depreciation and impairment losses (see accounting policy o).
           Capitalized leased assets are depreciated in accordance with the depreciation policy noted below,
           except where there is no reasonable certainty of obtaining ownership by the end of the lease term, in
           which case the asset is fully depreciated over the shorter of the lease term or its useful life. Repayments
           of principal reduce lease liabilities, while the finance charge component of the lease payment is
           charged directly to the consolidated statement of income as expense.
   (iii) Subsequent expenditure
         The Group recognises in the carrying amount of an item of tangible assets the cost of replacing part of
         such an item when that expenditure is incurred if it is probable that the future economic benefits
         embodied with the item will flow to the Group and the cost of the item can be measured reliably. All
         other costs are recognised in the consolidated statement of income as an expense as incurred.
   (iv)    Depreciation
           The Group’s tangible assets are depreciated over the estimated useful lives of the related assets from
           the date of purchase or the date of installation, on a straight-line basis. Land is not depreciated.
           The depreciation periods for tangible assets, which approximate the economic useful lives of such
           assets, are as follows:
           Description                                                              Year
           Buildings                                                                  50
           Furniture and equipment                                                  5-15
           Motor vehicles                                                            5-7


                                                                      13
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




           Significant accounting policies (continued)
           Leasehold improvements are amortized over the periods of the respective leases, also on a straight-line
           basis.
           The building of one of the consolidated entity is stated at its fair value as estimated by an independent
           appraiser. Surplus due to the revaluation was directly credited to equity as revaluation surplus and is
           depreciated over the remaining life of the building. Such revaluation surplus is not available for
           distribution.
           Expenditures for repairs and maintenance are charged to consolidated statement of income as incurred.

   (j)     Leases
   (i)     Finance leases -lessor
           The Group presents leased assets as a receivable equal to the net investment in the lease. Finance
           income is based on a pattern reflecting a constant periodic rate of return on the net investment
           outstanding. Initial direct costs are included in the initial measurement of the finance lease receivable
           and reduce the amount of income recognized over the lease term.
   (ii)    Finance leases - as lessee
           Finance leases, which transfer to the Group substantially all the risks and benefits incidental to
           ownership of the leased item, are capitalized at the inception of the lease at the fair value of the leased
           item or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned
           between the finance charges and reduction of the lease liability so as to achieve a constant rate of
           interest on the remaining balance of the liability.
           Finance charges are charged directly against income. Capitalized leased assets are depreciated over the
           estimated useful life of the asset.
   (iii) Operational leases - as lessee
         Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are
         classified as operating leases. These include rent agreements of branch premises, which are cancelable
         subject to a period of notice. Related payments are recognized as an expense in the consolidated
         statement of income on a straight-line basis over the lease term.
           When an operating lease is terminated before the lease period has expired, any payment required to be
           made to the lessor by way of penalty is recognized as an expense in the period in which the termination
           takes place.

   (k)     Intangible assets
   (i)     Goodwill
           The purchase method of accounting is used for acquired businesses. The purchase method of
           accounting involves allocating the cost of the business combination to the fair value of assets acquired
           and liabilities and contingent liabilities assumed at the date of acquisition. Goodwill arising on an
           acquisition represents the excess of the cost of the acquisition in the fair value of the net identifiable
           assets of the acquired companies at the dates of acquisitions. If the cost of acquisition is less than the
           fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the
           consolidated statement of income.




                                                                      14
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




           Significant accounting policies (continued)
           Goodwill is reflected at cost restated for the effects of inflation less and impairment losses (see
           accounting policy o). Goodwill is allocated to cash generating units and is no longer amortized, but is
           tested annually for impairment. In respect of associates, the carrying amount of goodwill is included in
           the carrying amount of the investment in associates.
           Subsequent changes in ownership of an affiliate, after control is obtained, that do not result in a loss of
           control are accounted for as an equity transaction. Accordingly any premium or discount on subsequent
           transactions with minority shareholders is recognized directly in equity and attributed to equity holders
           of the parent and no goodwill is recognized on such transactions. Goodwill is recognized as an asset
           provided that the sale of associates and affiliates is realized with third parties and sale income is
           recognized in the consolidated statement of income.
   (ii)    Intangible assets
           Intangible assets acquired separately from a business are capitalized at cost. Following initial
           recognition intangible assets are carried at cost less any accumulated amortization and any
           accumulated impairment losses. Intangible assets, excluding development costs, created within the
           business are not capitalized and expenditure is charged against profits in the year in which it is
           incurred. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible
           assets with finite lives are amortized on a straight-line basis over the best estimate of their useful lives
           and assessed for impairment whenever there is an indication that the intangible asset may be impaired.
           The amortization period and the amortization method for an intangible asset with a finite useful life are
           reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern
           of consumption of future economic benefits embodied in the asset is accounted for by changing the
           amortization period or method, as appropriate, and treated as changes in accounting estimates. The
           Group amortizes intangible assets with a finite life on a straight-line basis over the estimated useful
           lives of 3 to 5 years. There are no intangible assets with indefinite useful lives.
           Research and development costs
           Research costs are expensed as incurred. An intangible asset arising from development expenditure
           incurred on an individual project is recognized only when the Group can demonstrate the technical
           feasibility of completing the intangible asset so that it will be available for use or sale, its intention to
           complete and its ability to use or sell the asset, how the asset will generate future economic benefits,
           the ability of resources to complete and the availability to measure reliably the expenditure during
           development. Following the initial recognition of the development expenditure, the cost model is
           applied requiring the asset to be carried at cost less any accumulated amortization and accumulated
           impairment losses.
           The carrying value of development costs is reviewed for impairment annually when the asset is not yet
           in use or more frequently when an indication of impairment arises during the reporting year.
           Gains or losses arising from derecognition of an intangible asset are measured as the difference
           between the net disposal proceeds and the carrying amount of the asset and are recognized in the
           income statement when the asset is derecognized.

   (l)     Investment property
           Investment properties are stated at cost less accumulated depreciation and any impairment in value.
           Investment properties are depreciated on a straight-line basis over their estimated useful lives of 50
           years.




                                                                      15
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




           Significant accounting policies (continued)
           Investment properties are derecognized when either they have been disposed of or when the investment
           property is permanently withdrawn from use and no future economic benefit is expected from its
           disposal. Any gains or losses on the retirement or disposal of an investment property are recognized in
           the income statement in the year of retirement or disposal.
           Transfers are made to investment property when, and only when, there is a change in use, evidenced by
           ending of owner-occupation, commencement of an operating lease to another party or ending of
           construction or development. Transfers are made from investment property when, and only when, there
           is a change in use, evidenced by the commencement of owner-occupation or commencement of
           development with a view to sale.

   (m) Securities borrowing and lending business
           All deposits and borrowings are initially recognized at the fair value of consideration received less
           directly attributable transaction costs. After initial recognition interest-bearing deposits and borrowings
           are subsequently measured at amortized cost using the effective interest method. Gains or losses are
           recognized in the consolidated statement of income when the liabilities are derecognized as well as
           through the amortization process.
           If the Group purchases its own debt, it is removed from the balance sheet, and the difference between
           the carrying amount of the liability and the consideration paid is included in gain on trading securities,
           net.

   (n)     Repurchase and resale transactions
           The Group enters into sales of securities under agreements to repurchase such securities. Such
           securities, which have been sold subject to a repurchase agreement (“repos”), continue to be
           recognized in the balance sheet and are measured in accordance with the accounting policy of the
           security portfolio which they are part of. Securities sold subject to repos are reclassified in the financial
           statements as pledged assets when the transferee has the right by contract or custom to sell or repledge
           the collateral. The counterparty liability for amounts received under these agreements is included in
           other money market deposits. The difference between sale and repurchase price is treated as interest
           expense and accrued over the life of the repurchase agreements using effective interest method.
           Securities purchased with a corresponding commitment to resell at a fixed rate at a specified future
           date (“reverse repos”) are not recognized in the balance sheet, as the Group does not obtain control
           over the assets. Amounts paid under these agreements are included in other money market placements.
           The difference between purchase and resale price is treated as interest income and accrued over the life
           of the reverse repurchase agreement using effective interest method.

   (o)     Impairment
   (i)     Impairment of financial assets
           Assets carried at amortized cost

           The Group assesses at each balance sheet date whether there is objective evidence that a financial asset
           or group of financial assets is impaired. Objective evidence that a financial asset or group of assets is
           impaired includes observable data that comes to the attention of the Group about the following loss
           events:
           (a) significant financial difficulty of the issuer or obligor;
           (b) a breach of contract, such as a default or delinquency in interest or principal payments by more
                 than 90 days;



                                                                      16
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




           Significant accounting policies (continued)
           (c)     the Group granting to the borrower, for economic or legal reasons relating to the borrower’s
                   financial difficulty, a concession that the lender would not otherwise consider;
           (d)     it becoming probable that the borrower will enter bankruptcy or other financial reorganization;
           (e)     the disappearance of an active market for that financial asset because of financial difficulties; or
           (f)     observable data indicating that there is a measurable decrease in the estimated future cash flows
                   from a group of financial assets since the initial recognition of those assets, although the
                   decrease cannot yet be identified with the individual financial assets in the group, including:
                   (i)    adverse changes in the payment status of borrowers; or
                   (ii) national or local economic conditions that correlate with defaults on the assets in the
                          group of financial assets.
           If there is objective evidence that an impairment loss on loans and receivables carried at amortized cost
           has been incurred, the amount of the loss is measured as the difference between the asset’s carrying
           amount and the present value of estimated future cash flows (excluding future credit losses that have
           not been incurred) discounted at the financial asset’s original effective interest rate The calculation of
           the present value of the estimated future cash flows of a collateralized financial asset reflects the cash
           flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not
           the foreclosure is probable.
           The carrying amount of the asset is reduced through use of an allowance account. The amount of the
           loss is recognized in income statement.
           The Group first assesses whether objective evidence of impairment exists individually for financial
           assets that are individually significant, and individually or collectively for financial assets that are not
           individually significant. If it is determined that no objective evidence of impairment exists for an
           individually assessed financial asset, whether significant or not, the asset is included in a group of
           financial assets with similar credit risk characteristics and that group of financial assets is collectively
           assessed for impairment. Assets that are individually assessed for impairment and for which an
           impairment loss is or continues to be recognized are not included in a collective assessment of
           impairment.
           If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
           objectively to an event occurring after the impairment was recognized (such as an improvement in the
           debtor’s credit rating), the previously recognized impairment loss is reversed by adjusting the
           allowance account. Any subsequent reversal of impairment loss is recognized in income statement, to
           the extent that the carrying value of the asset does not exceed its amortized cost at the reversal date.
           A write off is made when all or part of a loan is deemed uncollectible or in the case of debt
           forgiveness. Such loans are written off after all the necessary procedures have been completed and the
           amount of the loss has been determined. Write offs are charged against previously established
           allowances and reduce the principal amount of a loan. Subsequent recoveries of amounts previously
           written off decrease the amount of the provision for loan impairment in the income statement.
           Assets carried at cost

           If there is objective evidence that an impairment loss on an unquoted equity instrument that is not
           carried at fair value because its fair value cannot be reliably measured, or on a derivative asset that is
           linked to and must be settled by delivery of such an unquoted equity instrument has been incurred, the
           amount of the loss is measured as the difference between the asset’s carrying amount and the present
           value of the estimated future cash flows discounted at the current market rate of return for a similar
           financial asset.




                                                                      17
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




           Significant accounting policies (continued)
           Available-for-sale financial assets

           If an available- for- sale asset is impaired, an amount comprising the difference between its cost (net of
           any principal payment and amortization) and its current fair value, less any impairment loss previously
           recognized in profit or loss, is transferred from equity to the income statement. Reversals in respect of
           equity instruments classified as available-for-sale are not recognized in profit or loss. Reversals of
           impairment losses on debt instruments are reversed through profit or loss, if the increase in fair value
           of the instrument can be objectively related to an event occurring after the impairment loss was
           recognized in profit or loss.
           The Group determines that available-for-sale equity instruments are impaired when there has been
           significant or prolonged decline in the fair value below its cost. This determination of what is
           significant or prolonged requires judgment. In making this judgment the Group evaluates among other
           factors, the normal volatility in share price. In addition, impairment may be appropriate when there is
           evidence of a deterioration in the financial health of the investee, industry or sector performance,
           changes in technology and operational and financing cash flows.
           Other assets
           The carrying amounts of the Group’s assets, are reviewed at each balance sheet date to determine
           whether there is any indication of impairment. If any such indication exists, the asset’s recoverable
           amount is estimated. For intangible assets that are not yet available for use, the recoverable amount is
           estimated at each balance sheet date. An impairment loss is recognized whenever the carrying amount
           of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are
           recognized in the consolidated statement of income.
           Impairment losses recognised in respect of cash-generating units are allocated first to reduce the
           carrying amount of any goodwill allocated to cash-generating units (group of units) and then, to reduce
           the carrying amount of the other assets in the unit (group of units) on a pro rata basis.
           Goodwill was tested for impairment annually, even through no indication of impairment existed.
   (ii)    Calculation of recoverable amount
           The recoverable amount of the Group’s investments in held-to-maturity securities and receivables is
           calculated as the present value of estimated future cash flows, discounted at the original effective
           interest rate inherent in the asset. Receivables with a short duration are not discounted. The recoverable
           amount of other assets is the greater of their net selling price and value in use. In assessing value in
           use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
           that reflects current market assessments of the time value of money and the risks specific to the asset.
           For an asset that does not generate largely independent cash inflows, the recoverable amount is
           determined for the cash-generating unit to which the asset belongs.




                                                                      18
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




           Significant accounting policies (continued)
   (iii) Reversals of impairment
         An impairment loss in respect of a held-to-maturity security or receivable is reversed if the subsequent
         increase in recoverable amount can be related objectively to an event occurring after the impairment
         loss was recognized. An impairment loss in respect of an investment in an equity instrument classified
         as available for sale is not reversed through profit or loss. If the fair value of a debt instrument
         classified as available-for-sale increases and the increase can be objectively related to an event
         occurring after the impairment loss was recognised in the consolidated statement of income, the
         impairment loss shall be reversed, with the amount of the reversal recognised in the consolidated
         statement of income. An impairment loss in respect of goodwill is not reversed. In respect of other
         assets, an impairment loss is reversed if there has been a change in the estimates used to determine the
         recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount
         does not exceed the carrying amount that would have been determined, net of depreciation or
         amortization, if no impairment loss had been recognized.
   (iv)    Loans, receivables and advances and held-to-maturity investments
           The recoverable amount of loans, receivables and advances and purchased loans that are classified as
           held-to-maturity is calculated as the present value of the expected future cash flows, discounted at the
           instrument’s original effective interest rate. Short-term balances are not discounted.
           If, in a subsequent period, the amount of impairment loss decreases and the decrease can be linked
           objectively to an event occurring after the write down, the write-down or allowance is reversed through
           the consolidated statement of income.
   (v)     Financial assets remeasured to fair value
           The recoverable amount of an equity instrument is its fair value. The recoverable amount of debt
           instruments and loans remeasured to fair value is calculated as the present value of expected future
           cash flows discounted at the current market rate of interest.
           Where an asset remeasured to fair value is impaired, the write down is recognized in the consolidated
           statement of income.
           If, in a subsequent period, the amount of impairment loss decreases and the decrease can be linked
           objectively to an event occurring after the write-down, the write-down is reversed through the
           consolidated statement of income.

   (p)     Capital increase
           Capital increases pro-rata to existing shareholders is accounted for at par value as approved at the
           annual meeting of shareholders.

   (q)     Employee benefits
           The Group has both defined benefit and defined contribution plans as described below:
           In accordance with existing social legislation in Turkey, the Group is required to make lump-sum
           termination indemnities to each employee who has completed over one year of service with the Group
           and whose employment is terminated due to retirement or for reasons other than resignation or
           misconduct.
           Such defined benefit plan is unfunded. The cost of providing benefits under the defined benefit plan is
           determined by independent actuaries annually using the projected unit credit method. All actuarial
           gains and losses are recognized in the income statement.


                                                                      19
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




           Significant accounting policies (continued)
           For defined contribution plans the Group pays contributions to publicly administered Social Security
           Funds on a mandatory basis. The Group has no further payment obligations once the contributions
           have been paid. The contributions are recognized as employee benefit expense when they are due

   (r)     Provisions
           A provision is recognized in the consolidated balance sheet when the Group has a legal or constructive
           obligation as a result of a past event, and it is probable that an outflow of economic benefits will be
           required to settle the obligation. If the effect is material, provisions are determined by discounting the
           expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of
           money and, where appropriate, the risks specific to the liability. Where the Group expects some or all
           of a provision to be reimbursed, for example under an insurance contract, the reimbursement is
           recognized as a separate asset but only when the reimbursement is virtually certain. The expense
           relating to any provision is presented in the consolidated income statement net of any reimbursement.

   (s)     Revenue and cost recognition
   (i)     Banking business
           Interest income and expense: Interest income and expense are recognized in the income statement for
           all interest bearing instruments on an accrual basis using the effective interest rate method. The
           effective interest rate method is a method of calculating the amortized cost of a financial asset or a
           financial liability (or group of financial assets or financial liabilities) and of allocating the interest
           income or interest expense over the relevant period. The effective interest rate is the rate that exactly
           discounts estimated future cash payments or receipts through the expected life of the financial
           instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or
           financial liability. When calculating the effective interest rate, the Group estimates cash flows
           considering all contractual terms of the financial instrument (for example, prepayment, call and similar
           options) but does not consider future credit losses. The calculation includes all fees paid or received
           between parties to the contract that are an integral part of the effective interest rate, transaction costs,
           and all other premiums or discounts. Interest income is suspended when loans are overdue by more
           than 90 days and is excluded from interest income until received.
           Fee and commission income: Fees and commissions are generally recognized on an accrual basis when
           the service has been provided. Commission and fees arising from negotiating or participating in the
           negotiation of a transaction for a third party are recognised on completion of the underlying
           transaction. Portfolio and other management advisory and service fees are recognized based on the
           applicable service contracts. Asset management fees and custody service fees that are continuously
           provided over an extended period of time are recognized rateably over the period service is provided.
           Fee for bank transfers and other banking transaction services are recorded as income when collected.
           Gain on trading securities, net: Net trading income includes gains and losses arising from disposals of
           financial assets at fair value through profit or loss and available for sale.
   (ii)    Insurance business:
           Unearned premium reserve: Unearned premiums are those proportions of the premiums written in a
           year that relate to the period of risk subsequent to the balance sheet date for all policies. Unearned
           premium reserve set aside for unexpired risks as of December 31, 2004, has been computed on daily
           pro-rata basis.
           Commissions and deferred acquisition costs: The direct and indirect costs and commission expenses
           incurred in acquiring the unearned portion of premiums are recorded as deferred acquisition costs and
           recognized in the profit and loss account on a similar basis as the premiums to which they relate.

                                                                      20
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




           Significant accounting policies (continued)
           Outstanding claims and IBNR reserves: Outstanding claims reserve represents the estimate of the total
           reported costs of notified claims on an individual case basis at the end of the year, as well as the
           corresponding handling costs. A provision for claims incurred but not reported (“IBNR”) is also
           established. Provision for claims are net of amounts recoverable from reinsurers.
         Premium income: Premium income is recognized in the period in which insurance cover is provided to
         the customer. Premiums received relating to future periods are deferred on a daily pro-rated basis and
         only recognized in the consolidated statement of income when earned. Reinsurance premiums are
         recognized on the same basis as the related premium income. Income from general insurance business
         in the consolidated statement of income is the net amount of the gross insurance premiums less
         reinsurance premiums, net claims and agents’ commissions, and the increase/decrease in insurance
         business funds and reflected in insurance technical income or expense (net). Staff costs and other
         administrative expenses are included in the relevant captions in the consolidated statement of income.
   (iii) Other businesses
         Revenues are recognized at the time of the services provided and/or acceptances made. General and
         administrative costs, selling, marketing and other distribution costs, and other operating costs are
         charged to expense as incurred.
   (iv)    Dividend income
           Dividend income is recognized in the consolidated statement of income on the date that the right to
           receive payment is established.
   (v)     Financing costs - net
           Net financing costs include interest receivable on funds invested and interest payable on borrowings
           calculated using the effective interest rate method for segments other than banking and finance
           segments. Foreign exchange gains and losses are also included in “Net financing income/(costs)”.

   (t)     Taxation
           Taxes on income for the year comprise current tax and the change in the deferred taxes. Current tax is
           the expected tax payable on the taxable income for the year, using tax rates enacted or substantially
           enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
           Deferred income tax is provided, using the liability method, on all taxable temporary differences
           arising between the carrying amounts of assets and liabilities for financial reporting purposes and the
           amounts used for taxation purposes, except for differences relating to goodwill not deductible for tax
           purposes and initial recognition of assets and liabilities which effect neither accounting nor taxable
           profit.
           Deferred tax liabilities and assets are recognized when it is probable that the future economic benefits
           resulting from the reversal of taxable temporary differences will flow to or from the Group. Deferred
           tax assets are recognized to the extent that it is probable that future taxable profit will be available
           against which the deferred tax asset can be utilised. Deferred tax assets are reduced to the extent that it
           is no longer probable that the related tax benefit will be realized. Currently enacted or substantially
           enacted tax rates are used to determine deferred taxes on income.
           Deferred tax assets and liabilities relating to a consolidated entity reporting to a specific tax office are
           offset against each other in the accompanying consolidated financial statements.
           Deferred taxes related to fair value remeasurement of available-for-sale assets and cash flow hedges,
           are charged or credited directly to equity and subsequently recognized in the income statement together
           with the deferred gains or losses that are realized.


                                                                      21
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




           Significant accounting policies (continued)
    (u) Fiduciary assets
           Assets held by the Group in a fiduciary, agency or custodian capacity for its customers are not included
           in the balance sheet, since such items are not treated as assets of the Group.

   (v)     Offsetting
           Financial assets and liabilities are offset and the net amount reported in the consolidated balance sheet
           when there is a legally enforceable right to set off the recognized amounts and there is an intention to
           settle on a net basis, or to realize the asset and settle the liability simultaneously.

   (y)     Segment reporting
           A segment is a distinguishable component of the Group that is engaged either in providing products or
           services (business segment), or in providing products or services within a particular economic
           environment (geographical segment), which is subject to risks and rewards that are different from those
           of other segments.




                                                                      22
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




           Notes to the consolidated financial statements
             Note   Description                                                     Pages
               1    Segment reporting                                               24-27
               2    Revenues and cost of revenues                                      28
               3    General and administrative expenses                                28
               4    Impairment losses, net                                             29
               5    Other operating income, net                                        29
               6    Net financing income/(costs)                                       29
               7    Taxation                                                        30-34
               8    Tangible assets                                                 34-35
               9    Intangible assets                                               35-36
              10    Investment property                                             36-37
              11    Investments in debt securities                                  37-38
              12    Account receivables                                             38-39
              13    Other current assets                                               39
              14    Banking loans and advances                                      39-41
              15    Financial assets at fair value through profit or loss              41
              16    Cash and cash equivalents                                          42
              17    Capital and reserves                                            43-44
              18    Long-term borrowings                                            45-46
              19    Debt securities and subordinated debt securities                   46
              20    Provisions                                                      46-47
              21    Short-term bank borrowings                                         48
              22    Deposits                                                        48-49
              23    Obligations under repurchase agreements                            49
              24    Derivative financial instruments                                50-51
              25    Accounts payable and other liabilities                             52
              26    Fair value information                                          52-53
              27    Commitments and contingencies                                   54-55
              28    Related party disclosures                                       55-56
              29    Risk management disclosures                                     56-64
              30    Group enterprises                                               64-67
              31    Subsequent events                                                  68




                                                                      23
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   1       Segment reporting
           Segment information is presented in respect of the Group’s business and geographical segments. The
           primary format, business segments, is based on the Group’s management and internal reporting
           structure.
           Measurement of segment assets and liabilities and segment results is based on the accounting policies
           set out in the accounting policy notes.
           Inter-segment pricing is determined on an arm’s length basis.
           Almost each entity included in the Group operates in one specific industry. Accordingly, all the
           financial statement components of an entity concerned are considered related only to its specific
           industry.
           Segment results, assets and liabilities include items directly attributable to a segment as well as those
           that can be allocated on a reasonable basis. Unallocated assets comprise deferred tax assets, prepaid
           taxes and interest earning assets of non-finance segments. Unallocated liabilities comprise deferred tax
           liabilities, taxes payable on income and interest bearing liabilities of non-finance segments.
           Segment capital expenditure is the total cost incurred during the period to acquire segment assets that
           are expected to be used during more than one period.
           The Group’s activities are conducted predominantly in Turkey which is the home country of Fiba
           Holding, the parent company. Other segments consists of European Union countries including the
           Netherlands, Malta, Ireland and non European Union countries including Switzerland, Russia and
           Romania.
           The Group comprises the following main business segments:
           Banking: Affiliates operating in the banking segment mainly involve in treasury, retail, investment and
           corporate banking businesses.
           Leasing: Affiliate operating in the leasing segment mainly involve in financial leasing businesses.
           Insurance: Affiliate operating in the insurance segment mainly involve in property and casualty
           insurance and reinsurance business.
           Factoring: Affiliate operating in the factoring segment mainly involve in factoring services to
           industrial and commercial firms.
           Others: Affiliates in other operations segment mainly involve in holding and service businesses. Fiba
           Holding is included in the other segment as well.
           Details of segment information are presented in the following pages.
           .




                                                                      24
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29

   1       Segment reporting (continued)
   1.1     Business segments
           31 December 2005                                           Banking       Leasing   Insurance    Factoring   Other    Eliminations        Total
           Revenues
           External revenues                                         2,543,546       59,764      92,545       20,237    1,877              -     2,717,969
           Inter segment revenues                                        2,790            -           -          976        -         (3,766)            -
            Total revenues                                           2,546,336       59,764      92,545       21,213    1,877         (3,766)    2,717,969
           Result
           Segment result                                              688,863       25,963        6,067      13,496   35,215        (25,027)      744,577
           Unallocated expenses                                                                                                                     (2,359)
            Profit from operations                                                                                                                 742,218
           Net financing income                                                                                                                    (12,963)
           Other income, net                                                                                                                        17,439
           Loss on net monetary position, net                                                                                                      (39,878)
           Taxation charge                                                                                                                        (202,254)
            Net profit for the year                                                                                                                504,562
           31 December 2005
   25




           Other information
           Segment assets                                           16,308,512      379,658      85,587       98,178   60,780       (503,359)   16,429,356
           Investments in equity securities                              6,152            -           -        6,256    6,479              -        18,887
           Unallocated assets                                                                                                                    1,525,151
            Total assets                                                                                                                        17,973,494
           Segment liabilities                                      15,627,723      219,240     103,088     110,814    29,208       (486,739)   15,603,334
           Unallocated liabilities                                                                                                                 676,461
            Total liabilities                                                                                                                   16,279,795
           31 December 2005
           Capital expenditure                                          97,229        1,162       5,603        3,620    4,141              -      111,755
           Depreciation                                                 42,387        1,146       1,020          302    1,761              -       46,616
           Non-cash expenses other than depreciation                   140,063        1,961      68,341        2,347        -              -      212,712
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29

   1       Segment reporting (continued)

           31 December 2004                                             Banking     Leasing    Insurance    Factoring   Other    Eliminations        Total
           Revenues
           External revenues                                           1,743,115     73,733      148,140       25,901        -              -     1,990,889
           Inter segment revenues                                         10,582          -            -        4,334        -        (14,916)            -
            Total revenues                                             1,753,697     73,733      148,140       30,235        -        (14,916)    1,990,889
           Result
           Segment result                                                445,643     45,309       (1,125)      18,935   75,075        (21,242)      562,595
           Unallocated expenses                                                                                                                      (2,212)
            Profit from operations                                                                                                                  560,383
           Net financing costs                                                                                                                      (22,274)
           Other income, net                                                                                                                         16,179
           Loss on net monetary position, net                                                                                                       (89,548)
           Taxation charge                                                                                                                         (113,112)
            Net profit for the year                                                                                                                 351,628
           31 December 2004
   26




           Other information
           Segment assets                                             12,532,335    196,085       67,643       77,345   29,261       (350,597)   12,552,072
           Investments in equity securities                               52,714        330            -        2,586    2,760              -        58,390
           Unallocated assets                                                                                                                     1,358,172
            Total assets                                                                                                                         13,968,634
           Segment liabilities                                        11,798,897    119,723       74,837     133,074     1,914       (310,408)   11,818,037
           Unallocated liabilities                                                                                                                  943,055
            Total liabilities                                                                                                                    12,761,092
           31 December 2004
           Capital expenditure                                            73,721        234        1,183          160      181              -       75,479
           Depreciation                                                   45,595      1,608          875          195    1,589              -       49,862
           Non-cash expenses other than depreciation                     110,258       (664)      50,877        7,760        -              -      168,231
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   1       Segment reporting (continued)
   1.2     Non-cash expenses other than depreciation
           Non-cash expenses other than depreciation for the year ended 31 December 2005 were as follows:
                                                 Banking         Leasing       Insurance     Factoring   Others     Total
           Provision for loans and
                                                  177,240           2,974            1,529        943         -   182,686
             doubtful receivables
           Insurance technical
                                                                           -        66,325           -        -    66,325
             reserves and provisions
           Other accrued expenses                   13,158                 -            -        1,404        -    14,562
           Amortization of intangibles               8,273                 -          338            -        -     8,611
           Provision for credit card
                                                     3,162                 -             -           -        -     3,162
             bonus payments
           Impairment in value of
                                                     2,970                 -             -           -        -     2,970
             goodwill
           Impairment in value of
                                                     1,622                 -             -           -        -     1,622
             tangible assets
           Provision for severance
                                                        854            (96)           149            -        -      907
             payment
           Depreciation of investment
                                                        827                -             -           -        -      827
             property
           Reversal of impairment on
                                                    (2,236)                -             -           -        -    (2,236)
             investment property
           Recoveries of loan losses
                                                   (69,222)          (917)               -           -        -   (70,139)
             and receivables
           Others                                   3,415               -                -           -        -     3,415
                                                  140,063           1,961           68,341       2,347        -   212,712
           Non-cash expenses other than depreciation for the year ended 31 December 2004 were as follows:
                                       Banking      Leasing       Insurance Factoring Others        Total
            Provision for loans and
              doubtful receivables         70,848         2,349          365     7,745          -     81,307
            Insurance technical
              reserves and provisions                          -     50,478           -         -     50,478
            Other accrued expenses          8,001              -           -          -         -      8,001
            Amortization of
              intangibles                   8,188              -           -          -         -      8,188
            Impairment in value of
              tangible assets               7,852              -           -          -         -      7,852
            Provision for severance
              payments                      2,642           152           74         15         -      2,883
            Depreciation of
               investment property          1,075              -           -          -         -      1,075
            Amortization of
              goodwill                      4,122              -           -          -         -      4,122
            Impairment on securities
              available-for sale           18,282              -           -          -         -     18,282
            Impairment on investment
              property                      5,250              -           -          -         -      5,250
            Recoveries of loan losses
              and receivables             (18,315)       (3,165)         (40)         -         - (21,520)
            Others                           2,313             -           -          -         -      2,313
            Total                         110,258         (664)      50,877      7,760          - 168,231


                                                                      27
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   2       Revenues and cost of revenues
           For the years ended 31 December, revenues and cost of revenues on the basis of banking and finance
           segment and other industrial segments were as follows:

                                                                                          2005             2004
           Banking operations
           Interest income                                                           1,917,967      1,396,837
           Interest expense                                                           (985,594)      (701,457)
           Fees and commission income                                                  291,481        134,878
           Fees and commission expense                                                 (66,419)       (63,393)
           Income from banking services                                                173,312        128,795
           Gain on trading securities                                                   38,595         30,506
           Other banking revenues                                                      122,191         52,099
           Other banking costs                                                         (31,097)        (8,484)
           Net operating income                                                      1,460,436        969,781
           Insurance operations
           Technical gain                                                               92,545        148,140
           Technical loss                                                              (67,075)       (70,591)
           Net technical gain                                                           25,470         77,549
           Leasing operations
           Interest on financial leases                                                 59,764         73,733
           Factoring operations
           Factoring interest income                                                    19,283         23,319
           Factoring commission income                                                     954          2,582
           Factoring commission expense                                                   (149)          (249)
           Net factoring income                                                         20,088         25,652
           Other segments
           Net revenues                                                                  1,877              -
                                                                                     1,567,635      1,146,715

   3       General and administrative expenses
           For the years ended 31 December, general and administrative expenses comprised the following:
                                                                                         2005           2004
           Personnel expenses                                                          348,851        254,909
           Depreciation and amortization                                                56,054         63,247
           Taxes other than on income                                                   24,639         22,748
           Other administrative expenses                                               291,517        230,779
                                                                                       721,061        571,683




                                                                      28
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   4       Impairment losses, net
           For the years ended 31 December, impairment losses comprised the following:
                                                                                            2005        2004
           Provision for loan and lease receivables                                      180,214       73,197
           Impairment in value of goodwill                                                 2,970            -
           Impairment in value of tangible assets                                          1,622        7,852
           Provision for insurance receivables                                             1,529          365
           Provision for factoring receivables                                               943        7,745
           Reversal of impairment in value of investment properties                       (2,236)           -
           Recoveries of provision for banking loans                                     (70,139)     (21,480)
           Impairment on investment securities available-for sale                               -      18,282
           Recoveries of provision for insurance receivables                                    -         (40)
           Impairment in value of investment properties                                         -       5,250
                                                                                         114,903       91,171


   5       Other operating income, net
           For the years ended 31 December, other operating income and expenses comprised the following:
                                                                                           2005         2004
           Gain/(loss) on sale of investment                                             (9,402)       86,052
           Share of profit of associates                                                  16,657       (9,638)
           Share of profit of associates from banking segment                              3,292          108
                                                                                         10,547        76,522


   6       Net financing income/(costs)
           For the years ended 31 December, net financing income and costs comprised the following:
                                                                                          2005             2004
           Interest income:
           Interest income on bank deposits                                                 840              747
           Interest income on trading securities                                            744              675
                                                                                          1,584            1,422
           Interest expense:
           Interest expense on borrowings                                              (13,611)       (15,498)
           Other interest and similar items                                             (1,017)           (783)
                                                                                      (14,628)        (16,281)
           Interest expense, net                                                      (13,044)        (14,859)
           Foreign currency exchange gain, net                                               81         (7,415)
                                                                                       (12,963)       (22,274)

           Interest income and interest expense amounts included in the “Net financing income/(costs)” above
           relate only to the segments other than banking since such amounts are reflected in “revenues” and
           “cost of revenues” in the results of the “banking segment”.




                                                                      29
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   7       Taxation
           Turkey
           As of 31 December 2005, corporate income tax is levied at the rate of 30% (2004: 33%) on the
           statutory YTL corporate income tax base, which is determined by modifying accounting income for
           certain exclusions and allowances for tax purposes for the year 2005. There is an additional tax
           computed only on the amounts of dividend distribution and is accrued only at the time of such
           payments. According to the amendments in tax legislations, which are effective from 24 April 2003, no
           income tax withholding is calculated over the dividends that are distributed to the shareholders from
           the profits of the period between 1999 and 2002, if these profits are exempted from corporation tax
           bases of the corporate.
           Effective from April 24, 2003, investment allowances provide a deduction from the corporate tax base
           of 40% of the purchases of the brand-new fixed assets having economic useful life and exceeding YTL
           10 thousand (2004: YTL 6 thousand) and directly related with the production of goods and services.
           Investment allowance that arose prior to April 24, 2003 are taxed at 19.8% (withholding tax) unless
           they are converted to new type at the will of the companies. Investment allowances can be carried
           forward indefinitely with indexed amounts.
           With introduction of inflation accounting in the Turkish tax practice beginning from 1 January 2004,
           all restatement differences on non-monetary items from inception date to 31 December 2003 are not
           subject to corporation tax and they became permanent differences. Accordingly, deferred taxes
           computed on such restatement differences until 1 January 2004 were reversed through the statement of
           income for the year ended 31 December 2003. All restatement differences that are arising from
           inflation accounting for the year beginning from 1 January 2004 are subject to corporation tax.
           10% withholding applies to dividends distributed by resident corporations to resident real persons,
           those who are not liable to income and corporation tax, non-resident real persons, non-resident
           corporations (excluding those that acquire dividend through a permanent establishment or permanent
           representative in Turkey) and non-resident corporations exempted from income and corporation tax.
           Dividend distributions by resident corporations to resident corporations are not subject to a
           withholding tax. Furthermore, in the event the profit is not distributed or included in capital, no
           withholding tax shall be applicable. Capital gains derived from cash sales of equity shares that have
           been held for at least two years are exempt from corporation tax if the gains are added to share capital.
           Furthermore, in the event the profit arising from the dividend receipt is not distributed or is included in
           capital, no withholding tax shall be applicable. As a result of the above exemption, the Group did not
           recognize a deferred tax liability on the undistributed profits of subsidiaries and associates and other
           temporary differences pertaining to other investments in shares issued by Turkish companies.
           In Turkey, the tax legislation does not permit a parent company and its affiliates to file a consolidated
           tax return. Therefore, provision for taxes, as reflected in the consolidated financial statements, has been
           calculated on a separate-entity basis. Under the Turkish taxation system, tax losses can be carried
           forward to be offset against future taxable income for up to five years. Tax losses cannot be carried
           back to offset profits from prior years.
           In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companies
           file their tax returns within four months following the close of the accounting year to which they relate.
           Tax returns are open for five years from the beginning of the year that follows the date of filing during
           which time the tax authorities have the right to audit tax returns, and the related accounting records on
           which they are based, and may issue re-assessments based on their findings.




                                                                      30
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   7       Taxation (continued)
           The Netherlands
           Corporate income tax is levied at the rate of 31.5 % (2004: 34.5%) on the worldwide income of
           resident companies, which is determined by modifying accounting income for certain exclusions and
           allowances for tax purposes for the year 2005. A unilateral decree for the avoidance of double taxation
           provides relief for resident companies from Dutch tax on income, such as foreign business profits
           derived through a permanent establishment abroad, if no tax treaty applies. There is an additional
           dividend tax of 5% computed only on the amounts of dividend distribution at the time of such
           payments. Under the Dutch taxation system, tax losses can be carried forward to be offset against
           future taxable income for an unlimited number of years. Tax losses can be carried back to offset profits
           up to 3 prior years. Companies must file their tax returns within six months following the close of the
           tax year to which they relate, unless the company applies for an extension (normally an additional nine
           months). Tax returns are open for five years from the date of final assessment of the tax return during
           which time the tax authorities have the right to audit tax returns, and the related accounting records on
           which they are based, and may issue re-assessments based on their findings.
           Russian Federation
           The applicable tax rate for current and deferred tax is 24%. The taxation system in the Russian
           Federation is relatively new and is characterised by frequent changes in legislation, official
           pronouncements and court decisions, which are often unclear, contradictory and subject to varying
           interpretation by different tax authorities. Taxes are subject to review and investigation by a number of
           authorities, which have the authority to impose severe fines, penalties and interest charges. A tax year
           remains open for review by the tax authorities during the three subsequent calendar years; however
           under certain circumstances a tax year may remain open longer.
           Romania
           The applicable tax rate for current and deferred tax is 16%. The Romanian Government has a number
           of agencies that are authorised to conduct audits (controls) of Romanian companies as well as foreign
           companies doing business in Romania. These controls are similar in nature to tax audits performed by
           tax authorities in many countries, but may extend not only to tax matters, but to other legal and
           regulatory matters in which the applicable agency may be interested. When management is aware of
           specific circumstances where there exists a probability of fine, appropriate reserves are established for
           such contingencies. It is likely that the Group’s consolidated affiliates in Romania will continue to be
           subject to controls from time to time for violations and alleged violations of existing and new laws and
           regulations. Although, the Group’s consolidated affiliates in Romania can contest the allegations of
           violations and resulting penalties when management believe there is cause to do so, the adoption or
           implementation of laws or regulations in Romania could have a material effect on the Group’s
           consolidated affiliates in Romania.




                                                                      31
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   7       Taxation (continued)
           The reported taxation charge for the years ended 31 December are different than the amounts
           computed by applying the statutory tax rate to profit before tax as shown in the following
           reconciliation:
                                                                                         2005                      2004
                                                                                     Amount         %          Amount       %
           Reported profit before taxation                                           706,816                   464,740
           Taxes on reported profit per statutory tax rate                          (212,045)   (30.00)       (153,364) (33.00)
           Permanent differences:
            Disallowable expenses                                                    (55,493)    (7.85)         (7,159)    (1.54)
            Tax penalty and losses                                                      (256)    (0.04)           (642)    (0.14)
            Utilization of investment allowance                                        1,718      0.24           2,491      0.54
            Utilization of previously unrecognized tax losses                          4,241      0.60               -         -
           Effect of change in tax rate                                                    -         -           1,735      0.37
           Consolidation adjustments                                                 (21,754)    (3.06)        (24,119)    (5.19)
           Restatement of non-monetary items                                          (7,432)    (1.05)          5,320      1.15
           Effect of different income tax rates in other countries                     6,938      0.98            (524)    (0.11)
           Tax exempt income                                                          80,331     11.36          53,881     11.59
           Others, net                                                                 1,498      0.21           9,269      1.99
           Taxation charge                                                          (202,254)   (28.61)       (113,112)   (24.34)
           The taxation charge for the years ended 31 December comprised the following items:
                                                                                                      2005            2004
           Current corporation and income taxes                                                     143,715        131,314
           Deferred taxes on taxable temporary differences                                           58,539        (18,202)
                                                                                                    202,254        113,112
           In accordance with the related regulation for prepaid taxes on income, advance payments during the
           year are being deducted from the final tax liability computed over current year operations.
           Accordingly, the taxation charge on income is not equal to the final tax liability appearing on the
           consolidated balance sheet.
           The taxes payable on income as of 31 December 2005 and 2004 comprised the following:
                                                                                          2005            2004
           Taxes on income                                                             202,254         113,112
           Less: Deferred tax (assets)/liabilities                                     (49,425)           2,023
           Less: Corporation taxes paid in advance                                    (120,700)        (41,867)
           Less: Inflation effect on taxes payable on income                            (3,184)             (31)
                                                                                        28,945           73,237
           Deferred income tax is provided, using the liability method, on all taxable temporary differences
           arising between the carrying amounts of assets and liabilities for financial reporting purposes and the
           amounts used for taxation purposes, except for differences relating to goodwill not deductible for tax
           purposes and initial recognition of assets and liabilities which effect neither accounting nor taxable
           profit.




                                                                      32
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   7       Taxation (continued)
           Deferred tax assets and deferred tax liabilities at 31 December 2005 and 2004 were attributable to the
           items detailed in the table below:
           Deferred income tax assets                                                         2005            2004
           Vacation pay liability and bonus accrual                                          6,540                -
           Plastic card bonus accrual                                                        3,199            2,351
           Reserve for employee severance indemnity                                          2,246            2,228
           Effect of IBNR provision                                                          1,668                -
           Effect of applying IAS 39                                                           691              185
           Loan loss provision                                                                 659           19,062
           Deferred gains and losses on foreign exchange contracts                             492           24,392
           Other                                                                             3,672            4,534
                                                                                            19,167           52,752

           Deferred income tax liabilities
           Difference between tax and reporting bases of premises and equipment
           and intangible assets                                                           (19,650)         (15,585)
           Restatement of non-monetary assets                                               (8,954)          (4,727)
           Revaluations of available-for-sale financial assets to fair value                (8,376)          (4,017)
           General banking risk provisions of Finansbank Suisse SA
             (“Finansbank Suisse”)                                                       (6,022)         (4,782)
           Revaluation of investment property                                            (2,492)         (4,167)
           Effect of deferred acquisition cost                                           (1,431)               -
           Other temporary differences                                                   (5,184)         (2,242)
                                                                                       (52,109)         (35,520)
           Net deferred income tax asset/(liability)                                   (32,942)          17,232
           Deferred and current income tax charge/(credit) at 31 December 2005 and 2004 were attributable to the
           items detailed in the table below:
                                                                                          2005             2004
           Deferred income tax charge/(credit) and income tax charge/(credit)
              recognized in the consolidated statement of income                       202,254          113,112
           Deferred income tax charge/(credit) on unrealized gain/(loss) on
              available-for-sale financial assets recognized in the equity             (10,789)          12,335
           Deferred income tax charge/(credit) on revaluation surplus recognized
              in the equity                                                               1,675           3,844

           Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off
           current tax assets against current tax liabilities and when the deferred income taxes relate to the same
           fiscal authority. The following amounts as of 31 December 2005 and 2004, determined after
           appropriate offsetting, are shown in the consolidated balance sheet:
                                                              2005                                    2004
                                                 Gross      Offsetting       Net           Gross    Offsetting         Net
           Deferred income tax assets           19,167         (18,656)      511          52,752       (12,421)     40,331
           Deferred income tax liabilities     (52,109)         18,656   (33,453)        (35,520)       12,421     (23,099)
           Deferred income tax assets, net     (32,942)              -   (32,942)         17,232              -     17,232




                                                                      33
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   7       Taxation (continued)
           Deferred income tax liabilities have not been established for the withholding and other taxes that
           would be payable on the unremitted earnings of subsidiaries and associate operating outside of Turkey
           as it is not certain whether such amounts will be permanently reinvested or received in cash. As at 31
           December 2005, such unremitted earnings totaled YTL 98,778 thousand at 31 December 2005 (2004:
           YTL 77,144 thousand). If such amounts are collected in cash in the form of dividends, they will be
           subject to 5% corporation tax in Turkey. On the other hand, if double tax treaty is signed between
           Turkey and the country where the subsidiary is resident, the provisions of double tax treaty will be
           considered.
   8       Tangible assets
           Movement of tangible assets and related accumulated depreciation during the year ended 31 December
           2005 was as follows:
                                                                                            Transfer to
                                                                                            investment        Exchange
                                              1 January       Additions       Disposals       property       adjustment     31 December
     Cost
     Land and buildings                         169,333          41,901         (10,313)       (10,310)         (11,506)         179,105
     Furniture and fixture                      313,760          49,798          (3,990)              -          (1,589)         357,979
     Leasehold improvement                       99,113          16,560          (1,080)              -            (327)         114,266
     Motor vehicles                              18,018           1,881          (3,475)              -             (95)          16,329
     Construction in progress                         -           1,615               -               -               -            1,615
                                                600,224         111,755         (18,858)       (10,310)         (13,517)         669,294
                                                                                            Transfer to
                                                                Current                     investment        Exchange
                                              1 January     year charge       Disposals       property       adjustment     31 December
     Less: Accumulated depreciation
     Land and buildings                          15,249           2,674               -                  -             -          17,923
     Furniture and fixture                      229,875          39,300             (51)                 -             -         269,124
     Leasehold improvement                       51,809           2,836               -                  -             -          54,645
     Motor vehicles                               8,439           1,806              (9)                 -             -          10,236
                                                305,372          46,616             (60)                 -             -         351,928
                                                                                           Transfer to
                                                                                           investment        Exchange
                                           1 January         Additions      Disposals       property         adjustment     31 December
     Less: Impairment in value
     Land and buildings                          (9,644)         (1,505)          4,930               -                -          (6,219)
     Furniture and fixture                            -            (117)             36               -                -             (81)
                                                 (9,644)         (1,622)          4,966               -                -          (6,300)
     Net carrying value                         285,208          63,517         (13,832)        (10,310)         (13,517)        311,066




                                                                      34
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   8       Tangible assets (continued)
           Movement of tangible assets and related accumulated depreciation during the year ended 31 December
           2004 was as follows:
                                                                                                     Exchange
                                                    1 January       Additions        Disposals      adjustment      31 December
           Cost
           Land and buildings                         154,201          23,495           (3,091)          (5,272)          169,333
           Furniture and fixture                      290,934          30,332           (4,316)          (3,190)          313,760
           Leasehold improvement                       85,525          14,231             (350)            (293)           99,113
           Motor vehicles                              11,363           7,421             (417)            (349)           18,018
           Construction in progress                     4,507               -           (2,621)          (1,886)                -
                                                      546,530          75,479          (10,795)        (10,990)           600,224
                                                                      Current                        Exchange
                                                    1 January     year charge        Disposals      adjustment      31 December
           Less: Accumulated depreciation
           Land and buildings                          10,420           4,829                   -             -            15,249
           Furniture and fixture                      189,291          40,584                   -             -           229,875
           Leasehold improvement                       49,268           2,541                   -             -            51,809
           Motor vehicles                               6,531           1,908                   -             -             8,439
                                                      255,510          49,862                   -             -           305,372
                                                                                                    Exchange
                                                 1 January         Additions        Disposals       adjustment     31 December
           Less: Impairment in value
           Land and buildings                          (1,792)         (7,852)               -                -            (9,644)
           Net carrying value                         289,228          17,765          (10,795)         (10,990)          285,208

           As of 31 December 2005, construction in progress relates to expenditures for a building in the course
           of construction.
           The impairment loss of YTL 1,622 thousand (2004: YTL 7,852 thousand) represents the write-down of
           certain property and equipment to recoverable amount and included in “impairment losses” in the
           consolidated income statement. The recoverable amount estimation was based on fair value less costs
           to sell and determined by valuer.
           Buildings include a building of a consolidated affiliate carried at revalued amount of YTL 24,671
           thousand (2004: YTL 22,596 thousand) of which revaluation has been originally performed in April
           2001 less accumulated depreciation. Surplus due to the revaluation at an amount of YTL 9,264
           thousand (2004: YTL 11,585 thousand) net of deferred tax of YTL 3,196 thousand (2004: YTL 3,842
           thousand) and net of minority interest of YTL 3,866 thousand (2004: YTL 3,698 thousand) was
           directly credited to equity as property revaluation surplus and is depreciated over the remaining life of
           the building.
   9       Intangible assets
           At 31 December 2005 and 2004, intangible assets comprised the following:
                                                                                                                  2005                2004
           Patents and licences                                                                                  28,112              28,180
           Goodwill, net                                                                                         10,139              17,218
           Other intangible assets                                                                                   98                  33
                                                                                                                 38,349              45,431




                                                                      35
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   9       Intangible assets (continued)
           Movement in goodwill and patents and licences during the years ended 31 December 2005 was as
           follows:
                                                                                               Patents and
           31 December 2005                                                         Goodwill      licences    Total
           At January 1, 2005 net of accumulated amortization and
                                                                                     17,218        29,233    46,451
           impairment
           Additions                                                                      -        10,004    10,004
           Disposals                                                                      -        (1,399)   (1,399)
           Disposal of a subsidiary                                                       -        (1,052)   (1,052)
           Reversal of goodwill related to shares of subsidiary sold                 (4,109)            -    (4,109)
           Provision for impairment                                                  (2,970)            -    (2,970)
           Exchange adjustment                                                            -           (63)      (63)
           Amortization charge for the year                                               -        (8,611)   (8,611)
                                                                                     10,139        28,112    38,251
           Movement in goodwill and patents and licences during the years ended 31 December 2004 was as
           follows:
                                                                                               Patents and
           31 December 2004                                                         Goodwill      licences    Total
           At January 1, 2004 net of accumulated amortization and
                                                                                     21,340        26,985    48,325
           impairment
           Additions-internal development                                          -          10,436    10,436
           Amortization charge for the year                                  (4,122)          (8,188) (12,310)
                                                                             17,218           29,233    46,451
           As from January 1, 2005, the date of adoption of IFRS 3, goodwill was no longer amortized but is
           subject to annual impairment testing. The impairment loss of YTL 4,109 thousand in 2005 represents
           the write down of goodwill arising from Finans Finansal Kiralama A.Ş. (“Finans Leasing”) to fair
           value less costs to sell.
           As of 31 December 2004, goodwill was amortized on a straight-line basis over the useful economic life
           varying between 40 months and 20 years.
           Patents and licenses mainly relate to software and service rights regarding to salary payments
           settlements. Service rights are capitalized and amortized over the life of the related contracts ranging
           between 2 years to 3 years. Softwares are amortized over useful economic lives of 3-5 years.
           The Group has capitalized research and development costs arising from the development phase of an
           internal project amounting to YTL 6,311 thousand (2004: YTL 8,181 thousand).

   10      Investment property
           Movement of investment property during the years ended 31 December 2005 and 2004 were as
           follows:
                                                                            2005              2004
           At January 1, 2005                                             28,782              2,729
           Additions                                                        4,612                 -
           Disposals                                                       (9,569)                -
           Transfers from owner occupied properties                       10,310 (*)              -
           Transfers from assets held for sale                                  -            32,378 (**)
           Depreciation                                                      (827)           (1,075)
           Reversal of impairment                                           2,236                 -
           Provision for impairment                                             -            (5,250)
                                                                          35,544             28,782

                                                                      36
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   10      Investment property (continued)
           (*)    Includes owner occupied properties reclassified from tangible assets due to the change in
                  intention of the Group in the way of capital appreciation of these assets rather than own
                  occupation.
           (**) Includes properties reclassified from assets held for sale due to the deprivation of disposal
                  commitment within 1 year.
           Gross carrying amount and accumulated depreciation (aggregated with accumulated impairment
           losses) of investment property are as follows:
                                                                                         2005            2004
           Gross carrying amount                                                       46,711          35,110
           Accumulated depreciation                                                    (3,370)         (1,078)
           Accumulated impairment                                                      (7,797)         (5,250)
                                                                                       35,544          28,782

           As of December 31, 2005, the fair value of investment properties, which have been determined based
           on the valuations performed is YTL 40,281 thousand (2004: YTL 33,341 thousand).
   11      Investments in debt securities
           At 31 December 2005 and 2004, available for sale securities comprised the following:
                                                                                    2005                    2004
                                                                                           Effective           Effective
                                                                                            interest             interest
           Availabe-for-sale investments                                   Amount            rate %     Amount    rate %
           Debt instruments YTL
           Turkish government bonds                                    1,556,599              17.97      70,880     20.29
           Turkish treasury bills-free                                   394,173              17.87     574,948     22.53
           Turkish treasury bills-blocked                                 18,722              19.77           -
           Debt instruments foreign currency
           Turkish government bonds                                       36,058               7.55        2,854    11.15
           Eurobonds issued by the Turkish government                    320,979               9.60      477,451    11.89
           Foreign government bonds                                       16,957               5.75       73,063     4.00
           Foreign corporate bonds                                       239,920               8.19       61,653     7.30
           Turkish corporate bonds                                             -                          30,471    11.95
                                                                       2,583,408                       1,291,320
           Mutual funds                                                   12,986                          12,841
           Equity instruments – listed                                         4                           4,125
           Equity instruments –unlisted                                    6,272                          40,769
           Loaned securities available for sale                          122,577                         216,185
                                                                       2,725,247                       1,565,240

           As of December 31, 2005, the carrying value and the nominal amounts of government securities kept
           in the Central Bank of Turkish Republic (“CBT”) and Istanbul Menkul Kıymetler Borsası Takas ve
           Saklama Bankası Anonim Şirketi (“IMKB Takasbank”) for legal requirements and as a guarantee for
           money market operations included in the trading, investment and loans to government portfolio
           accounted under loans and advances are YTL 445,313 thousand (2004: YTL 434,250 thousand), and
           YTL 386,227 thousand (2004: YTL 288,808 thousand), respectively.




                                                                      37
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   11      Investments in debt securities (continued)
           In order to protect the interests of policy holders, under Insurance Supervision Law 7397, Finans
           Sigorta A.Ş. (“Finans Insurance”) is obliged to deposit investments in a blocked account with a state
           bank and/or to mortgage fixed assets in favour of Undersecretariat of Treasury. As of 31 December
           2005, the amount of such gurantees (computed over direct premiums earned in 2004) to be set as YTL
           17,913 thousand (2004: YTL 11,680 thousand) and as of the same date, the gurantees of Finans
           Insurance as security for policy holders amount to YTL 8,722 thousand (2004: YTL 12,202 thousand).
           YTL 1,739,797 thousand debt securities included in the trading, investment and loaned securities
           portfolios have floating interest rates, whereas the rest of the debt securities have fixed interest rates.
           Mutual funds and equity securities do not earn interest.
           Available for sale securities at cost
           Unlisted equity securities amounting to YTL 6,272 thousand (2004: YTL 40,769 thousand) classified
           as available for sale represent the Group’s equity holdings in companies, the shares of which are not
           publicly traded. Consequently they are reflected at restated cost less reserve for impairment, as a
           reliable estimate of their fair values could not be made.
           Held to maturity securities
           In 2004, the Group has sold US Dollar 231,366,320 foreign currency bonds which have been
           previously classified as held to maturity and thus, reclassified all other securities in the held to maturity
           portfolio as available-for-sale.
   12      Account receivables
           At 31 December 2005 and 2004, accounts receivable comprised the following:
                                                                                                2005             2004
           Factoring receivables                                                               91,664           67,974
           Insurance receivables                                                               41,330           48,169
           Receivables from lease payments                                                     10,698            5,974
           Other                                                                                  191              110
           Doubtful receivables                                                                 5,958           10,445
           Allowance for doubtful receivable                                                   (5,589)         (10,445)
                                                                                              144,252          122,227

           Movements in the allowance for doubtful receivables during the years ended 31 December              were as
           follows:
                                                                                        2005                      2004
           Balance at the beginning of the year                                       10,445                     9,083
           Restatement effect of the opening balance                                    (411)                   (1,377)
           Allowance for the year                                                      4,799                     9,109
           Recoveries                                                                   (499)                   (1,669)
           Effect of acquisition of affiliates                                           209                          -
           Written-off                                                                (8,954)                   (4,701)
                                                                                       5,589                    10,445
           As of 31 December 2005, the Group’s total provision for lease payments outstanding, premiums
           receivable and factoring receivables are YTL 2,327 thousand, YTL 1,529 thousand and YTL 943
           thousand (2004: YTL 999 thousand, YTL 365 thousand and YTL 7,745 thousand), respectively.
           Recovery for such impairment losses for lease payments outstanding during 2005 is YTL 499 thousand
           (2004: recovery for lease payments YTL 1,629 thousand and recovery for premium receivable YTL 40
           thousand).




                                                                      38
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   12      Accounts receivable (continued)
           The Group held the following collaterals for its receivables at 31 December 2005 and 2004:
                                                                                             2005             2004
           Customer cheques obtained as collateral                                         31,370            49,379
           Mortgages                                                                        5,160             4,192
           Customer notes obtained as collateral                                            3,410             1,321
                                                                                           39,940            54,892
           All the factoring receivables are domestic transactions on recourse basis with maturity of less than one
           year.

   13      Other current assets
           At 31 December 2005 and 2004, other current assets comprised the following:
                                                                                                     2005             2004
           Prepaid expenses                                                                         37,191           21,694
           Equipment to be leased                                                                   26,805            9,874
           Deferred acquisition cost arising from insurance segment                                 18,550           13,878
           Receivables related to mutual fund sales                                                 18,143           10,504
           Payments for credit card settlements                                                      5,909            6,587
           Value added tax receivable                                                                1,331              824
           Brokerage commission accrual                                                                534            1,781
           Prepaid tax                                                                                 272               92
           Other                                                                                    20,544           22,258
                                                                                                   129,279           87,492

   14      Banking loans and advances
           At 31 December 2005 and 2004, outstanding loans were divided between loan types as follows:
                                                                                         2005
                                                                Amount                             Effective interest rate
                                                                                     Foreign                           Foreign
                                                                     Foreign        currency            Foreign       currency
                                                   YTL              currency         indexed    YTL    currency        indexed
           Corporate loans                    1,256,776            5,562,785          53,200     24             8            7
           Loans to government                        -               16,264         343,853      -             5            8
           Consumer loans                     2,117,903              564,014         245,741     20            15            7
           Credit cards                       1,201,461               19,439               -     69            29            -
           Loans in arrears                     209,616               66,820               -      -              -           -
           Total loans                        4,785,756            6,229,322         642,794
           Less: Reserve for
           impairment on loans and              (209,616)             (66,820)             -
           advances
                                              4,576,140            6,162,502        642,794




                                                                      39
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   14      Banking loans and advances (continued)
                                                                                         2004
                                                                Amount                             Effective interest rate
                                                                                     Foreign                           Foreign
                                                                     Foreign        currency            Foreign       currency
                                                   YTL              currency         indexed    YTL    currency        indexed
           Corporate loans                    1,439,575            5,121,638         170,432     34             7            8
           Loans to government                        -               33,055         352,121      -             4            5
           Consumer loans                       425,079              244,521          62,662     30            36            8
           Credit cards                         993,659                7,416               -     75            37            -
           Loans in arrears                     113,642               46,362               -      -              -           -
           Total loans                        2,971,955            5,452,992         585,215
           Less: Reserve for
           impairment on loans and              (176,114)             (48,506)
           advances
                                              2,795,841            5,404,486        585,215

           Loans to government include floating rate foreign currency indexed bonds directly purchased from
           Turkish Treasury amounting to YTL 343,853 thousand (2004: YTL 352,121 thousand) that are not
           quoted in an active market and with maturity of 14 June 2006.
           Loans with variable rates are YTL 4,243,048 thousand (2004: YTL 3,352,668 thousand) and fixed
           rates are YTL 7,178,655 thousand (2004: YTL 5,480,843 thousand).
           As of 31 December 2005, the Group has entered into cross currency interest rate swap transactions
           against YTL with a maturity of longer than 1 year amounting to YTL 874,580 thousand (US Dollar
           650 million) at the opening date to hedge its fair value risk in certain portfolio of its fixed rate
           consumer loans with a maturity of longer than 2 years amounting to YTL 863,788 thousand. As of 31
           December 2005 hedged consumer loans amounting to YTL 863,788 thousand at amortized cost are
           remeasured at fair value and the resulting gain of YTL 40,333 thousand is adjusted to the carrying
           amount of the loans and recognized in the consolidated statement of income.
                                                                                                      2005             2004
           Total gross loans                                                                    11,657,872        9,010,162
           Finance lease receivables                                                               456,531          310,958
           Less: Unearned interest income                                                          (78,663)         (54,243)
           Allowance for possible loan losses and finance lease receivables                       (281,981)        (230,761)
                                                                                                11,753,759        9,036,116


           Maturity of banking loans and advances can be analyzed as follows:
                                                                                                     2005             2004
           Short-term                                                                            8,139,264        6,887,981
           Long-term                                                                             3,614,495        2,148,135
                                                                                                11,753,759        9,036,116
           As of 31 December 2005, YTL 200,368 thousand (2004: YTL 180,663 thousand) of gross lease
           receivables are denominated in foreign currency (mainly US Dollar and Euro) and the effective interest
           rates are between 8.0% to 17.33% (2004: 8.5% to 15% ) for foreign currency and 14.65% to 42.80%
           (2004: 27.00% to 35.00%) for YTL receivables. Finance lease receivables have fixed interest rates.
           As of 31 December 2005, loans and advances on which interest is not being accrued, or where interest
           is suspended amounted to YTL 276,436 thousand (2004: YTL 160,003 thousand).


                                                                      40
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   14      Banking loans and advances (continued)
           Movements in the allowance account during the years ended 31 December 2005 and 2004 were as
           follows:
                                                                                                       2005           2004
           Balance at the beginning of the year                                                      230,761        216,141
           Inflation effect of the beginning balance and current provision                           (20,585)       (32,978)
           Write-offs                                                                                (36,442)        (4,749)
           Recoveries (reversals related to the collection of prior years’ provisions
           credited to impairment losses)                                                            (69,640)       (19,851)
           Provision for the year                                                                    177,887         72,198
                                                                                                     281,981        230,761

   15      Financial assets at fair value through profit or loss
           At 31 December 2005 and 2004, financial assets at fair value through profit or loss comprised the
           following:
                                                                               2005                         2004
                                                                                      Effective
                                                                                       interest                   Effective
                                                                Amount                   rate%    Amount     interest rate%
           Trading securities at fair value
           Debt instruments YTL
           Turkish government bonds                               68,078                 16.50      9,281             25.5
           Turkish treasury bills                                  7,095                 14.10          -                -
           Debt instruments foreign currency                                                            -
           Turkish government bonds                                   132                 5.50        141             7.25
           Eurobonds issued by the Turkish
                                                                           -                  -    20,442            11.50
           government
           Foreign government bonds                              13,814                   5.90      5,729             4.00
           Foreign corporate bonds                              127,453                  10.39     60,061             7.90
           Turkish corporate bonds                                    -                      -        208            11.50
                                                                216,572                            95,862
           Others
           Mutual funds                                             101                            10,553
           Equity securities listed                              12,224                                 -
           Loaned trading securities                              7,985                                 -
                                                                236,882                           106,415
           As of December 31, 2005 foreign corporate bonds include credit linked notes with carrying value of
           YTL 83,918 thousand (2004: YTL 60,061 thousand). YTL 44,249 thousand of which YTL 29,245
           thousand are three times leveraged (2004: YTL 32,526 thousand of which YTL 32,526 thousand are
           three times leveraged) of such notes are referenced to the Republic of Turkey and YTL 39,669
           thousand (2004: YTL 27,535 thousand) are referenced to a Turkish corporate.




                                                                      41
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   16      Cash and cash equivalents
           At 31 December 2005 and 2004, cash and cash equivalents comprised the following:
                                                                                         2005               2004
           Cash and balances with CBT                                                 114,681             107,698
           Cash at banks                                                               12,889                 616
           Cheques and other liquid assets                                                  40                  -
                                                                                      127,610             108,314
           Deposits with other banks and financial institutions                     1,392,431           1,428,843
           Reserve deposits at CBT                                                    954,649             788,117
           Other money market placements                                                8,676              21,927
                                                                                    2,483,366           2,347,201
           As of 31 December, cash and cash equivalents disclosed in the statements of cash flows comprise the
           following:
                                                                                             2005            2004
           Deposits with other banks and financial institutions                         1,392,431       1,428,843
           Cash and cash equivalents                                                      127,610         108,314
           Other money market placements                                                    8,676          21,927
           Time deposits with original maturities of more than three months               (13,691)        (14,559)
           Compensating balance                                                           (47,632)        (68,564)
                                                                                         1,467,394       1,475,961
           Cash and cash equivalents include cash balances on hand, due from banks with original maturity
           periods of less than three months, reserve deposits at Central Bank and other cash items.
           At 31 December 2005, cash and cash equivalents included balances with CBT amounting YTL
           954,649 thousand (2004: YTL 788,117 thousand) as minimum reserve requirement. These funds are
           not available for the daily business of the Group and its affiliates. As required by the Turkish Banking
           Law, these reserve deposits are calculated on the basis of customer deposits taken at the rates
           determined by the CBT.
           As of 31 December 2005, YTL 29,573 thousand (2004: YTL 18,027 thousand) and YTL 18,059
           thousand (2004: YTL 35,865 thousand) portion of compensating balance are pledged assets related
           with funds borrowed from foreign markets and derivative transactions respectively. As of 31
           December 2004 the Group has pledged placements amounting to YTL 14,672 thousand in relation to
           credit default swaps referenced to two Russian corporate bonds.
           According to the regulations of the CBT and Central Banks of other countries, banks are obliged to
           reserve a portion of certain liability accounts as specified in the related decrees. Such mandatory
           reserves are not available for use in the Group’s day to day operations. Reserves deposited with CBT
           amounted to YTL 762,847 thousand (2004: YTL 598,124 thousand).
           As of 31 December 2005 and 2004, reserve deposit rates applicable for YTL and foreign currency
           liability accounts with the CBT are 6% and 11% (2004: 6% and 11%), respectively.
           As of 31 December 2005, the interest rates applied for YTL and foreign currency reserve deposits by
           the CBT are 10.25% and 1.14% (2004: 12.50% and 0.99%), respectively.
           Banks in the Netherlands are required to maintain a certain amount of funds and/or reserves on an
           account at the Dutch Central Bank and receive interest on their reserve requirement deposits at rates in
           line with open-market facilities. The reserve deposit requirements applicable in Netherlands for all
           deposits were 2% less Euro 100,000 (in full). Also reserve deposits amounting to YTL 11,277
           thousand kept at the Swiss and Russian Central Banks are demand deposits.

                                                                      42
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29


   17      Capital and reserves
           For the years ended 31 December 2005 and 2004, the reconciliation of movement in capital and reserves was as follows:
                                                                                     Unrealized
                                                                                         gain in
                                                                   Adjustment         available-      Property      Currency                                                               Total
                                                        Share         to share          for-sale   revaluation    translation    Retained    Net Income                Minority    Shareholders’
                                                       capital          capital     investments        surplus     difference    earnings    for the year     Total     interest          equity
        At 1 January 2004                              40,000           76,568           10,889          7,019        (18,148)    223,129                   339,457    511,387          850,844
        Revaluation of land and buildings                    -                -                -        (2,974)             -           -               -    (2,974)           -          (2,974)
        Net change in unrealized gain in
        available-for-sale securities, net of tax             -                 -         9,343              -             -            -             -       9,343            -          9,343
        Currency translation differences                      -                 -             -              -       (22,181)           -             -     (22,181)           -        (22,181)
        Net profit for the year                               -                 -             -              -             -            -       150,115     150,115            -        150,115
        Dividend declared and paid                            -                 -             -              -             -      (13,873)            -     (13,873)           -        (13,873)
        Change in minority interest on
        consolidated affiliates                             -                 -               -              -             -           -              -           -     236,268          236,268
        At 31 December 2004                            40,000            76,568          20,232          4,045       (40,329)    209,256        150,115     459,887     747,655        1,207,542
        Revaluation of land and buildings                   -                 -               -         (1,843)            -           -              -      (1,843)          -           (1,843)
        Net change in unrealized gain in
 43




        available-for-sale securities, net of tax             -                 -           473              -             -            -               -       473            -             473
        Currency translation differences                      -                 -             -              -        (9,887)           -               -    (9,887)           -          (9,887)
        Transfer of net income to retained
        earnings                                            -                 -                -             -              -     150,115       (150,115)         -            -              -
        Net profit for the year                             -                 -                -             -              -           -        126,673    126,673            -        126,673
        Transfer to share capital                     310,000           (71,073)               -             -              -    (238,927)             -          -            -              -
        Dividend declared and paid                          -                 -                -             -              -     (16,676)             -    (16,676)           -        (16,676)
        Change in minority interest on
        consolidated affiliates                             -                 -               -             -              -           -              -           -      387,417         387,417
        At 31 December 2005                           350,000             5,495          20,705         2,202        (50,216)    103,768        126,673     558,627    1,135,072       1,693,699
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   17      Capital and reserves (continued)
   17.1 Paid-in capital
        At 31 December 2005, the paid-in capital of Fiba Holding amounted to YTL 355,495 thousand (2004:
        YTL 116,568 thousand) as restated in terms of YTL units current at 31 December 2005 pursuant to
        IAS 29 in the accompanying consolidated financial statements.
        At 31 December 2005, the paid-in capital of Fiba Holding comprises 350,000,000 shares (2004:
        40,000,000 shares) of YTL 1 each. The movement in shares for the years ended 31 December 2005
        and 2004 were as follows:
                                                                                             In thousands of ordinary shares
                                                                                                  2005               2004
           At the beginning of the year                                                          40,000             40,000
           Issued as a result of transfer from inflation effect                                 269,356                  -
           Issued as a result of transfer from income on sales of investments                     2,385                  -
           Issued as a result of transfer from legal reserves                                    38,259                  -
                                                                                                350,000             40,000


           At 31 December 2005 and 2004, shareholding structure of Fiba Holding based on number of shares is
           presented below:
                                                                      Thousand       2005    Thousand                2005
                                                                       of shares        %     of shares                 %
           Hüsnü M. Özyeğin                                             342,968      97.99       39,195              97.99
           Others                                                          7,032      2.01          805               2.01
                                                                        350,000     100.00       40,000             100.00
   17.2 Reserves
        The legal reserves, which are net off against retained earnings, are established by annual appropriations
        amounting to 5% of income disclosed in the Group’s statutory accounts until it reaches 20% of paid-in
        share capital (first legal reserve). Without limit, a further 10% of dividend distributions in excess of
        5% of paid-in capital is to be appropriated to increase legal reserves (second legal reserve). The first
        legal reserve is restricted and is not available for distribution as dividend unless it exceeds 50% of
        share capital. In the accompanying consolidated financial statements, the total of the legal reserves of
        the consolidated entities amounted to YTL 60,221 thousand as of 31 December 2005 (2004: YTL
        50,086 thousand).
   17.3 Minority interest
           For the years ended 31 December 2005 and 2004, movement of the minority interest were as follows:
                                                                                         2005            2004
           Minority interest at the beginning of the year                            747,655          511,387
           Sales to minority, net                                                      38,647           56,021
           Minority interest of changes in currency translation difference            (38,900)         (31,734)
           Minority interest of changes in unrealized gain in available-for-sale
               investments                                                             10,821           12,523
           Minority interest of changes in property revaluation surplus                (1,040)          (2,055)
           Minority interest of net profit for the year                              377,889          201,513
                                                                                   1,135,072          747,655




                                                                      44
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   18      Long-term borrowings
           At 31 December 2005 and 2004, long-term borrowings on the basis of banking segment and other than
           banking segments were as follows:
           Summary of the borrowings as of 31 December 2005 and 2004 are as follows:
           Long-term borrowings                                                                     2005            2004
           Long term bank borrowings-banking segment                                              363,715          41,141
           Long term bank borrowings-other than banking segment                                    82,067           6,815
           Obligations under finance leases                                                           175               -
                                                                                                  445,957          47,956

           Short-term portion of long-term borrowings                                               2005            2004
           Short term portion of long term borrowings-finance segment                             314,065          77,411
           Short term portion of long term borrowings-other segments                                2,515         112,844
           Obligations under finance leases                                                         1,518               -
                                                                                                  318,098         190,255
           Banking segment:
                                                                    2005                                  2004
                                                                           Effective                             Effective
                                                                            interest                              interest
                                                           Amount               rate                Amount            rate
           Fixed interest                                  232,846               6.0                 98,575            5.9
           Floating interest                               460,906               5.7                 31,372            4.7
                                                           693,752                                  129,947
           Less: Deferred commission
           income                                          (15,972)                                  (11,395)
           Less: Short-term portion of
           long-term borrowings                           (314,065)                                  (77,411)
                                                           363,715                                    41,141
           Repayments of medium/long term borrowing are as follows:
           Banking Segment:                          2005                                                 2004
                                                           Floating                                              Floating
                                            Fixed rate          rate                              Fixed rate          rate
           2005                                      -              -                                65,108       12,303
           2006                               192,142       121,923                                  27,432         8,628
           2007                                40,704       306,721                                   6,035         2,984
           2008                                      -       13,689                                        -        2,984
           2009 and thereafter                       -       18,573                                        -        4,473
                                              232,846       460,906                                  98,575       31,372
           Other segments                                                            2005                         2004
                                                                                    Original      YTL                YTL
                                                                Interest %          amount     Amount             Amount
           US Dollar                                             3.23-4.89            31,124    47,702            112,640
           Euro                                                  5.50-6.94            25,197    36,880              7,019
                                                                                                84,582            119,659
           Less: Short-term portion of long-term
           borrowings                                                                           (2,515)          (112,844)
                                                                                                82,067               6,815
           Floating rate borrowings bear interest at rates fixed in advance for periods of 3-6 months.


                                                                      45
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   18      Long-term borrowings (continued)
           The Group has obtained a syndication loan amounting to Euro 55 million in 2004 with maturity 16
           October 2006 and the floating interest.
           On 23 November 2004, the Group has obtained a securitization loan from abroad via special purpose
           vehicles (“SPV’s”) amounting to US Dollar 125 million fixed interest and US Dollar 225 million
           floating interest with five years maturity, quarterly interest payment and no principal payment for two
           years. On 15 March 2005, the Group obtained another securitization loan from abroad amounting to
           US Dollar 500 million with seven years maturity, quarterly floating interest payment and no principal
           payment for three years.
           On June 24, 2005, the Group has obtained two syndication loans totaling to US Dollar 450 million.
           First one amounting to US Dollar 220 million is with one year maturity, quarterly floating interest
           payment and no principal payment, and the second one amounting to US Dollar 230 million is with
           two years maturity, quarterly floating interest payment and no principal payment for two years.
           The Group has obtained a syndication loan amounting US Dollar 80 million in 2005 with maturity of
           22 April 2006 and floating interest.

   19      Debt securities and subordinated debt securities
                                                                    2005                      2004
                                                                           Effective                     Effective
                                                                            interest                      interest
                                                           Amount             rate%         Amount          rate%
           Debt securities                               1,442,776               6.3        555,558            5.3
           Subordinated debt securities                    364,721               8.0        279,406            9.0
           The Group has obtained subordinated loan on 7 October 2004 from international markets via SPV’s
           with leadership of an international investment bank with ten year maturity, semi-annual interest
           payments and principal payment at the maturity amounting to US Dollar 200 million. The interest rate
           of loan is 9.0% and there is a repayment option at the end of the fifth year.
           The Group has obtained a subordinated loan on 8 July 2005 with eight years maturity, semi-annual
           interest payments and principal payment at the maturity amounting to US Dollar 3,250,000 with 8%
           interest rate.
           The Group has obtained subordinated loan on 29 September 2005 with ten years maturity, quarterly
           interest payments and principal payment at the maturity amounting to Euro 60 million. The interest
           rate of the loan is Euribor+3 and there is a repayment option at the end of the fifth year.
           The Group has obtained a long term murabaha with fixed interest payment amounting to US Dollar 20
           million in 2004. The repayment of the principal has begun on November 30, 2004 and will be repaid in
           equal installments until November 30, 2006.

           The Group has not had any defaults of principal, interest or redemption amounts or other breaches of
           loan covenants during 2005 (2004: none).
   20      Provisions
           At 31 December 2005 and 2004, provisions comprised the following:
                                                                                            2005            2004
           Insurance claim reserve                                                         24,675          14,006
           Provision for credit cards bonus payments                                       10,662           7,837
           Employee termination benefits                                                    7,815          11,824
           Unused vacation pay liability                                                    6,297             648
           Other                                                                            5,916           6,705
                                                                                           55,365          41,020

                                                                      46
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   20      Provisions (continued)
           For the year ended 31 December 2005, movements in the provisions were as follows:
                                                                          Provision for
                                              Employee      Insurance       credit card
                                            termination          claim           bonus
                                                benefits       reserve        payments     Other               Total
           At 1 January 1 2005                    11,824         14,006            7,837      6,705           40,372
           Sale of a subsidiary                     (212)                               -         -             (212)
           Provided in the current year              907         66,325            3,162      3,415           73,809
           Utilized                                 (664)       (55,046)                -    (3,768)         (59,478)
           Unused amounts reversed                (3,642)              -                -         -           (3,642)
           Exchange differences/
           Monetary gain                            (398)           (610)           (337)      (436)          (1,781)
           At 31 December 2005                     7,815         24,675           10,662      5,916           49,068
           The major classes of general insurance written by Finans Insurance include fire, marine, accident, third
           party motor and engineering insurance. Risk under these policies usually covers a 12 month duration.
           For general insurance contracts, claims provisions (comprising provisions for claims reported by
           policyholders and claims incurred but not yet reported) are established to cover the ultimate cost of
           settling the liabilities in respect of claims that have occurred and are estimated based on known facts at
           the balance sheet date. Claim provisions reported by policyholders are provided based on the expertise
           reports or appraisals of the insured and the expert.
           The provisions are defined as part of a regular ongoing process as claims experience develops, certain
           claims are settled and further claims are reported. Outstanding claims provisions are not discounted for
           the time value of money.
           The measurement process of provision for IBNR primarily includes projection of future claims costs
           through a statistical projection based on the IBNR provided in the previous six years. The principal
           assumption underlying the estimates is Finans Insurance’s past claims development experience. This
           includes assumptions in respect of average claim costs, claims handling costs, claims inflation factors
           and claim numbers for each accident year. Judgement is used to assess the extent to which external
           factors such as judicial decisions and government legislation affect the estimates.
           Other key assumption includes variation in interest, delays in settlement and changes in foreign
           currency rates.
           The reserve for severance payments has been calculated by estimating the present value of future
           probable obligation of the Group arising from the retirement of the employees.
           Actuarial valuation methods were developed to estimate the enterprise’s obligation under defined
           benefit plans. Accordingly, the following actuarial assumptions were used in the calculation of the total
           liability:
                                                                                          2005                  2004
           Expected inflation rate                                                        12%                   10%
           Expected rate of salary/limit increase                                        6.175                  16%
           The computation of the liability is predicated upon retirement pay ceiling announced by the
           Government. As of 31 December 2005, the ceiling amount is YTL 1,727.15 in full (2004: YTL
           1,574.74 in full).



                                                                      47
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   21      Short-term bank borrowings
           At 31 December 2005 and 2004, short-term borrowings on the basis of banking segment and other
           segments were as follows:
                                                                                     2005            2004
           Short term borrowings
           Short term borrowings-banking segment                                 2,418,501     1,135,500
           Short term borrowings-other than banking segment                         48,494        69,248
                                                                                 2,466,995     1,204,748
           Banking Segment:
                                               2005                                   2004
                                                             Effective                           Effective
                                     Amount            interest rate %       Amount        interest rate%
                                            Foreign YTL       Foreign            Foreign YTL Foreign
                                 YTL       currency     % currency        YTL currency      % currency
           Fixed interest     39,882        852,375 14.9            4.3 42,536   522,485 19.6          3.4
           Floating interest        -     1,526,244      -          4.7      -   570,479     -         2.9
                              39,882      2,378,619                     42,536 1,092,964

           Other segments:
                                                                                             2005          2004
           Short term borrowings in Euro                                                    30,178        21,773
           Short term borrowings in US Dollar                                               16,315        33,392
           Short term borrowings in other currencies                                         2,001        14,083
                                                                                            48,494        69,248

           Floating rate borrowings bear interest at rates fixed in advance for periods of 3-6 months.
           Short-term interest bearing borrowings mature on various dates between 5 January 2006 and 21
           December 2006 (2004: 3 January 2005 and 30 December 2005). At 31 December 2005, the interest
           rates applied to short-term interest bearing borrowings range between 3.71% to 7% (2004: 5.65% to
           8%) for Euro and 3.30% to 7.00% (2004: 5.50% to 7.94%) for US Dollar.
           On 30 November 2005 a syndication loan of US Dollar 725 million with one year maturity and semi-
           annually floating interest rate was obtained from a banking consortium led by HVB Group (Bayerische
           Hypo und Vereinsbank AG Vereins – und Westbank AG) for export financing.
           On 21 December 2005, a bridge loan of US Dollar 220 million was obtained from Morgan Stanley
           International Limited with floating interest rate and maturity of February 14, 2006.
           The Group has not had any defaults of principal, interest or redemption amounts or other breaches of
           loan covenants during 2005 (2004: none).
   22      Deposits
           At 31 December 2005 and 2004, Deposits from other banks comprised the following:
                                                                                        2005               2004
           Demand                                                                      13,165             34,670
           Time                                                                       334,963            169,245
           Other money market deposits                                                 20,015                  -
                                                                                      368,143            203,915


                                                                      48
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   22      Deposits (continued)
           At 31 December 2005, deposits from banks include both YTL accounts amounting to YTL 178,952
           thousand (2004: YTL 37,978 thousand) and foreign currency denominated accounts amounting to YTL
           189,191 thousand (2004: YTL 165,937 thousand). Effective interest rate for YTL deposits from banks
           ranges between 14.8-15.1% (2004: 17.3-22.2 %), effective interest rate for foreign currency
           denominated accounts ranges between 4.3-4.65% (2004: 4.0 %)
           At 31 December 2005 and 2004, customers’ deposits comprised the following:

                                                                              2005                               2004
                                                              Demand              Time        Total              Total
           YTL
            Saving                                             170,265        2,264,499   2,434,764          1,546,467
            Commercial and other                               395,164          493,190     888,354            715,033
           Foreign currency
            Saving                                            381,733         4,528,714   4,910,447          5,779,682
            Commercial and other                              659,666           925,354   1,585,020          1,249,633
                                                            1,606,828         8,211,757   9,818,585          9,290,815


                                                                                                     2005         2004
           Banking customer deposits                                                             9,818,585    9,290,815
           Bank deposits                                                                           368,143      203,915
                                                                                                10,186,728    9,494,730
           As of 31 December 2005, effective interest rates are 17.5% (2004: 22.9%) for YTL saving deposits,
           16.7% (2004: 21.7%) for YTL commercial and other deposits and 2.8% (2004: 3.3%) for foreign
           saving currency deposits, 4.0% (2004: 3.5%) for foreign currency commercial and other deposits,
           respectively.
   23      Obligations under repurchase agreements
           At 31 December 2005 and 2004, obligations under repurchase agreements comprised the following:
                                            2005                                       2004
                                                         Effective                                   Effective
                                   Amount             interest rate           Amount              interest rate
                                                          Foreign                                     Foreign
                                      Foreign YTL currency                        Foreign      YTL currency
                               YTL currency         %            %         YTL currency          %           %
           Due to
            customers       15,450            - 15.1              -      15,030          -    18.3            -
           Due to banks     85,062      28,472 15.4           4.65      199,652          -    17.3            -
                           100,512      28,472                          214,682          -
           Repurchase agreements amounting to YTL 102,331 thousand will mature within one month and the
           remaining YTL 26,653 thousand will mature within 3-6 months.




                                                                      49
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   24      Derivative financial instruments
           In the ordinary course of business, the Group enters into various types of transactions that involve
           derivative financial instruments. A derivative financial instrument is a financial contract between two
           parties where payments are dependent upon movements in price in one or more underlying financial
           instruments, reference rates or indices. Derivative financial instruments include forwards, swaps,
           futures, swaptions, credit default swaps and options.
           The table below shows the favorable (assets) and unfavorable (liabilities) fair values of derivative
           financial instruments together with the notional amounts. The notional amount is the amount of a
           derivative’s underlying asset, reference rate or index and is the basis upon which changes in the value
           of derivatives are measured. The notional amounts indicate the volume of transactions outstanding at
           year-end and are neither indicative of the market risk nor credit risk.
           Swap transactions that are designated as hedging instruments for fair value hedges in accordance with
           International Financial Reporting Standards are accounted for in accordance with hedge accounting
           policies and other derivative financial instruments such as forward foreign currency purchase and sale
           transactions, options, swaps and futures that can not be designated as hedging instruments are
           classified as held-for-trading and accounted for accordingly.
           Fair value of derivatives that are not quoted in active markets are determined by using internal pricing
           models. To the extent practical, models use observable data, however areas such as credit risk,
           volatilities and correlations require management to make estimates. Changes in assumptions about
           these factors could affect reported fair value of derivatives.
           Fair values of forward foreign currency purchase and sales contracts, currency and interest rate swap
           transactions are calculated by using internal pricing models based on market data.
           Fair values of option contracts are calculated with option pricing models.
           Futures and swaption transactions are valued by settlement prices obtained from counterparties as of
           the balance sheet date.
           Credit default swap transactions are valued by market prices as of balance sheet date and related
           unrealized gains and losses are reflected in the current year consolidated statement of income.

                                                                                          2005
                                                                        Fair value    Fair value     Notional amount in
                                                                            assets     liabilities                YTL
           Derivatives held for trading
           a) Foreign exchange derivatives
           Currency forwards                                                 3,611        4,481                755,705
           Currency swaps                                                   32,254      119,438              3,063,133
           Currency futures                                                      -            -                    786
           Currency options-bought and sold (*)                                  -          562                744,710
           Common stock options                                                  -            -                  5,000
           b) Interest rate derivatives
           Interest rate swaps                                                   50       2,145                 36,957
           Cross-currency swaps                                                   -      28,398                117,848
           Swaption                                                               -         589                 78,566
           Securities options bought and sold (*)                               319         254                174,154
           Other interest rate contracts                                          -          61                  1,039
           Futures                                                                -         573                 70,376
           Derivatives held for hedging
           Cross-currency interest rate swaps (**)                               -       72,350                851,126
                                                                            36,234      228,851              5,899,400



                                                                      50
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   24      Derivatives financial instruments (continued)
                                                                                         2004
                                                                        Fair value   Fair value     Notional amount in
                                                                            assets    liabilities                YTL
           Derivatives held for trading
           a) Foreign exchange derivatives
           Currency forwards                                                27,051       6,653              1,222,252
           Currency swaps                                                  199,252      92,409              2,630,252
           Currency options-bought and sold                                    665         665                585,198

           b) Interest rate derivatives
           Securities options bought and sold                                    -         661                 98,419
                                                                           226,968     100,388              4,536,121
           (*) As of 31 December 2005 the Group has foreign currency Euro purchase options amounting to Euro
           35,045,836 against US Dollar, foreign currency Euro sale options amounting to Euro 4,079,729 against
           US Dollar, foreign currency US Dollar sale options amounting to US Dollar 20,000,000 against JPY,
           foreign currency GBP sale options amounting to GBP 500,000 against CHF and foreign currency US
           Dollar sale options amounting to US Dollar 179,693,717 against YTL, foreign currency US Dollar
           purchase options amounting to US Dollar 179,334,238 against YTL foreign currency Euro purchase
           options amounting to Euro 44,007,375 against YTL, foreign currency Euro sale options amounting to
           Euro 31,000,000 against YTL and foreign currency GBP purchase options amounting to GBP 850,000
           against YTL and foreign currency CHF sale options amounting to CHF 1,300,000 against YTL with its
           customers. The Group has offsetting foreign currency purchase and sales options with other banks for
           the same amounts.
           Also the Group has eurobond purchase options amounting to US Dollar 12,000,000 and eurobond sale
           options amounting to US Dollar 100,000,000 with its customers and eurobond purchase options
           amounting to US Dollar 8,000,000 and eurobond sale options amounting to US Dollar 13,000,000 with
           banks.
           The Group has foreign currency sale options amounting to US Dollar 200,000 and Euro 100,000
           against YTL, Euro 5,400,000 against US Dollar for its “foreign exchange risk protected deposit
           product”.
           The Group has foreign currency purchase options amounting to US Dollar 26,000,521 and foreign
           currency sale options amounting to US Dollar 17,750,000 and GBP 450,000.
           As of December 31, 2005, the Group has common stock sale options amounting to YTL 5,000
           thousand with its customers and common stock purchase options at same amount with other banks.
           (**) The Group funds its long term fixed interest rate YTL loan portfolio with long term (up to 10
           years) floating interest rate foreign currency money funds obtained from international markets. The
           Group changes the foreign currency liquidity obtained from the international markets to YTL liquidity
           with long term swap transactions (fixed YTL interest rate and floating foreign currency interest rate).
           The Group hedges its fair value risk on a part of its fixed rate loan consumer portfolio with a maturity
           of longer than 2 years amounting to YTL 863,788 thousand with cross currency interest rate swap
           transactions against YTL with a maturity of longer than 1 year amounting to YTL 874,580 thousand
           (US Dollar 650 million) at the opening date.
           As of 31 December 2005 and 2004, the majority of outstanding transactions in derivative financial
           instruments were with the banks and other financial institutions.




                                                                      51
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   25      Accounts payable and other liabilities
           At 31 December 2005 and 2004, trade payables and other current liabilities comprised the following:
                                                                                           2005             2004
           Cash collaterals                                                              113,504         124,353
           Payables for credit card settlements                                           94,006          94,229
           Checks at clearing house                                                       65,564          84,223
           Unearned premiums reserve-net                                                  55,287          47,201
           Withholding taxes and duties payable                                           34,757          25,423
           Accounts payable                                                               28,818          19,814
           Blocked checks                                                                 30,177          38,234
           Payment orders                                                                 20,706          15,218
           Bonus payment accrual                                                          16,702           1,017
           Accrued expense                                                                13,472          16,772
           Other trade payable                                                            13,123               -
           Provision for tax penalty                                                       8,346               -
           Deferred income                                                                 7,738               -
           Advances from customers                                                         5,863           3,953
           Income accrual on forward                                                       1,404               -
           Due to reinsurers                                                              13,117          11,365
           Other                                                                          29,346          45,502
                                                                                        551,930          527,304

   26      Fair value information
           Fair value is the amount at which a financial instrument could be exchanged in a current transaction
           between willing parties, other than in a forced sale or liquidation, and is best evidenced by a quoted
           market price.
           The estimated fair values of financial instruments have been determined using available market
           information by the Group, and where it exists, appropriate valuation methodologies. However,
           judgement is necessary required to interpret market data to determine the estimated fair value. While
           management has used available market information in estimating the fair values of financial
           instruments, the market information may not be fully reflective of the value that could be realised in
           the current circumstances.
           Management has estimated that the fair value of certain balance sheet instruments is not materially
           different than their recorded values except for those security investments and Turkish Treasury
           securities reflected under loans and advances to customers. These balance sheet instruments include
           loans and advances to banks and customers except for loans to Turkish Treasury against securities,
           deposits from banks and customers, obligations under repurchase agreements, loans and advances from
           banks, and other short-term assets and liabilities that are of a contractual nature. Management believes
           that the carrying amount of these particular financial assets and liabilities approximate their fair value,
           partially due to the fact that it is a practice to renegotiate interest rates to reflect current market
           conditions.




                                                                      52
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   26      Fair value information (continued)
           The table below summarizes the Group’s exposure to interest rate risk on the basis of the remaining
           period at the balance sheet date to the repricing date:
                                                            Carrying amount                 Fair value
                                                             2005           2004         2005             2004
           Financial assets
           Loans and advances                          11,381,436      8,785,542   11,430,626         8,819,275
           Minimum lease payments receivables             372,323        250,574      388,780           257,059
                                                       11,753,759      9,036,116   11,819,406         9,076,334
           Financial liabilities
           Deposits from other banks                              368,143              203,915      368,143      203,915
           Customer deposits                                    9,818,585            9,290,815    9,826,380    9,301,565
           Funds borrowed, debt securities and
             subordinated debt securities                      5,038,547             2,277,923    5,077,990    2,308,183
                                                              15,225,275            11,772,653   15,272,513   11,813,663
           Loans and advances are net of provisions for impairment. The estimated fair value of loans and
           advances represents the discounted amount of estimated future cash flows expected to be received.
           Expected cash flows are discounted at current market rates to determine fair value.
           Estimated fair value of lease contracts receivables represents the discounted amount of estimated future
           cash flows expected to be received. Expected cash flows are discounted at current market rates to
           determine fair value.
           The estimated fair value of deposits from other banks and customer deposits with no stated maturity,
           which includes non-interest bearing deposits is the amount repayable on demand.
           The estimated fair value of fixed interest bearing deposits and funds borrowed without quoted market
           price is based on discounted cash flows using interest rates for new deposits and debts with similar
           remaining maturity.
           The aggregate fair values are calculated based on quoted market prices. For those notes where quoted
           market prices are not available, a discounted cash flow model is used based on a current yield curve
           appropriate for the remaining term to maturity.
           Fair values of remaining financial assets and liabilities carried at cost, including balances with central
           banks, deposits with other banks and financial institutions, other money market placements and
           deposits, reserve deposits at central banks, are considered to approximate their respective carrying
           values due to their short-term nature.




                                                                      53
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   27      Commitments and contingencies
           Commitments and contingent liabilities are discussed separately for “segments other than banking and
           finance” and “banking and finance segment” in the following paragraphs.
   27.1 Segments other than banking and finance
        Commitments and contingent liabilities arising in the ordinary course of business for the entities
        operating in the “segments other than banking and finance” comprised the following items as of 31
        December 2005 and 2004:
           Letters of guarantee                                                         2005                2004
           Given to banks                                                             12,651             22,821
           Given to others                                                             1,033                  -
                                                                                      13,684             22,821
           Collaterals given                                                          76,100            196,126
           As of 31 December 2005, for the factoring segment, commitments for purchase and sale of foreign
           currencies under forward agreements amounted to YTL 53,672 thousand (2004: YTL -), almost all due
           within six months.
           In the normal course of its operations in the insurance segment, Finans Insurance has faced with legal
           disputes, claims and complaints, in which most cases stem from insurance operations. The necessary
           income/expense provision for those revocable cases against /on behalf of Finans Insurance have been
           provided in the financial statements:
                                                                                        2005                2004
           Cases where Finans Insurance is defendant                                   3,640               3,401
           Cases where Finans Insurance is plaintiff                                   4,445               3,310
   27.2 Banking segment
        In the ordinary course of banking activities, the entities included in the “banking segment” undertake
        various commitments and incur certain contingent liabilities that are not presented in the
        accompanying consolidated financial statements, including letters of guarantee, acceptance credits and
        letters of credit.
        At 31 December 2005 and 2004, commitments and contingent liabilities comprised the following
        items:
                                                                                        2005                2004
           Letters of guarantee                                                     3,251,481         2,663,650
           Credit card limits                                                       2,018,444         2,032,981
           Acceptance credits                                                       1,278,199         1,006,312
           Letters of credit                                                          970,526           913,224
           Other commitments                                                          569,812           496,588
                                                                                    8,088,462         7,112,755
           As of 31 December 2005, irrevocable commitments are YTL 2,588,256 thousand (2004: YTL
           2,419,602 thousand), almost all due within a year.




                                                                      54
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   27      Commitments and contingencies (continued)
           On April 27, 2001, Ministry of Transportation of Pakistan Government (Pakistan Government)
           requested to liquidate the letter of guarantee given by Finansbank A.Ş. (“Finansbank”) in favour of
           Bayındır Inşaat Turizm Ticaret ve Sanayi Anonim Şirketi (“Bayındır Inşaat”). However, in return
           Bayındır Inşaat opened a precautionary case on May 2, 2001. On September 16, 2002, Pakistan
           Government has opened a legal case against Finansbank amounting to US Dollar 5,583,817
           (approximately YTL 7,312 thousand) and Pakistan Rupees 145,770,028 (approximately YTL 6,497
           thousand). Finansbank management, upon advice of its legal counsel, due to the development and
           progress of the case, is of the opinion that the case will result in favour of Bayındır Inşaat,
           consequently no reserve is provided in the consolidated financial statements.
           Istanbul first Tax Court ruled in favour of Finansbank in the court case initiated by Finansbank to
           deduct the inflation accounting loss for the year 2001 from 2003 taxable income. The Court ruled
           Finansbank to receive YTL 34,217 thousand from the tax authority. Additionally, Istanbul firstTax
           Court also ruled in favour of Finansbank in the court case initiated by Finansbank pertaining to the
           repayment of YTL 4,406 thousand tax collected on the investment incentive totalling YTL 22,255
           thousand in 2003 on the same basis of inflation accounting practices.
           The tax and other government authorities (Social Security Institution) have the right to inspect the
           Group’s tax returns and accounting record for the fiscal years that remained unaudited, as the amount
           can not be estimated with any degree of certainty. The Group’s management believes that no material
           assessment will arise from any future inspection for unaudited fiscal years.
           The Group provides custody, investment management and advisory services to third parties. Those
           assets that are held in a fiduciary capacity are not included in these financial statements.
           The Group also manages 11 (2004: 9) open-ended investment funds which were established under the
           regulations of the Turkish Capital Market Board. In accordance with the funds’ charters, the Group
           purchases and sells securities on behalf of funds, markets their participation certificates and provides
           other services in return for a management fee and undertakes management responsibility for their
           operations. Management fee and commission income received from investment funds amounted to
           YTL 19,362 thousand (2004: YTL 17,515 thousand).
           As of December 31, 2005, the Group had investment custody accounts amounting to YTL 2,752,246
           thousand (2004: YTL 2,423,695 thousand) and financial assets under portfolio management amounting
           to YTL 801,967 thousand (2004: YTL 403,906 thousand).
   28      Related party disclosures
           For the purpose of accompanying consolidated financial statements, the shareholders, key management
           personnel and the Board members, and in each case, together with their families and companies
           controlled by/affiliated with them; and associates, investments and joint venture partners are
           considered and referred to as the related parties. A number of transactions are entered into with the
           related parties in the normal course of business. Most of the related party activity is eliminated at
           consolidation and the remainder activity is not material to the Group. These transactions were carried
           out on an arms-length basis during the normal course of business.
           At 31 December 2005 and 2004, the Group has the following balances outstanding from its related
           parties:
                                                                                         2005              2004
            Due to related parties                                                      26,992                 -
            Due from related parties                                                    53,172            16,503
           In 2004, the Group has net premium collection amounting to US Dollar 56 million related to the option
           contracts entered with Fina Holding A.Ş. (“Fina Holding”)


                                                                      55
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   28      Related party disclosures (continued)
           For the years ended 31 December, the Group earned income amounts and was charged for expense
           amounts in relation to their transactions with its related parties as summarized below:
                                                                                        2005                 2004
            Financial income                                                           63                     17
            Factoring interest income                                                 522                    427
            Factoring commission income                                                  -                   175
            Financial Expenses                                                       (105)                     -
            Administrative expenses                                                (1,220)                   (19)
                                                                                        -                 -
           Key management costs including renumeration and fees for the year ended 31 December 2005 amount
           to YTL 21,431 thousand (2004: YTL 18,543 thousand) on a consolidated basis.

   29      Risk management disclosures
   29.1 Strategy for the Use of Financial Instruments and Explanation Regarding the Foreign Currency
        Transactions
           The major funding sources of the Group are customer deposits and funds borrowed from abroad. The
           customer deposits are with fixed rates and have an average maturity of 1 month. Funds borrowed from
           abroad are generally with floating rates and are repriced at an average period of three and six months.
           The Group diverts its placements to assets with high return, low risk and sufficient collaterals. The
           Group manages the liquidity structure to meet its liabilities when due by diversifying the funding
           sources and keeping sufficient cash and cash equivalents. The maturities of funds and use of funds
           resources are considered and evaluated as to the current market conditions. The Group adopts high
           return on use of funds as a risk management policy. Customer deposits of Finansbank and Finansbank
           NV (“Finansbank Holland”) constitutes 60% and 28%, respectively, of consolidated customer deposits.
           Finansbank Holland uses funds collected through customer deposits primarily for foreign trade
           financing, and remaining funds are placed in other banks and invested in foreign government bonds.
           Among the operation areas of the Group, the main activities generating yields higher than the
           calculated average yield are credit card transactions.
           Besides customer deposits, the Group funds its long term fixed interest rate YTL loan portfolio with
           long term (upto 10 years) floating interest rate foreign currency funds obtained from international
           markets. The Group changes the foreign currency liquidity obtained from the international markets to
           YTL liquidity with long term swap transactions (fixed YTL interest rate and floating foreign currency
           interest rate). Therefore, the Group not only funds its long term fixed interest rate loans with YTL but
           also hedges itself against fair value risk.
           The Group has determined securities portfolio limits based on the market risk limitations for money,
           capital and commodity markets. Products included in the securities portfolio are subject to position and
           risk limits. Position limits restrict the maximum position based on the product with a certain ratio of
           capital. Risk limits are expressed in terms of “Value at Risk (VAR)” by taking the risk tolerance as a
           cap.
           The Group documents, at the inception of the transaction, the relationship between hedging
           instruments and hedged items, as well as risk management objective strategy for undertaking various
           hedge transactions. The Group also documents its assessment, both at hedge inception and on an
           ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in
           offsetting changes in fair values of hedged items.



                                                                      56
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   29      Risk management disclosures (continued)
           In the fair value hedge, changes in fair value of derivatives (swaps) that are designated and qualify as
           fair value hedges are recorded in the consolidated statement of income together with any changes in
           the fair value of the hedged asset (portfolio of long-term fixed interest loans) that are attributable to the
           hedged risk.
   29.2 Liquidity risk
           Liquidity risk represents risk of not having sufficient cash or cash inflows to meet the cash outflows
           completely and on time, as a result of instable cash flows.
           Liquidity risk may also result from inability to penetrate to market and to close open positions quickly
           at suitable prices and sufficient amounts due to market disruptions or barriers. To mitigate liquidity
           risk, the Group diversifies funding sources as customer deposits and funds borrowed from abroad and
           keeps certain level of assets as cash and cash equivalents.
           The Group evaluates liquidity position daily. Cash flow projections and scenarios are analyzed in every
           two weeks by the top management at Asset/Liability Committee meetings. Liquidity ratio, calculated
           monthly by the Market Risk Committee is used as preliminary indicator of the general liquidity
           position of the Group. List of available limits, instruments and securities which can be used as
           collateral to create liquidity in the event of a possible liquidity crisis is updated weekly. Alternative
           funding strategies to be followed in case of a liquidity problem are evaluated within the current limits
           and positions to be taken are determined. The Group may use these funding sources to meet additional
           funding requirements when needed. Consolidated foreign subsidiaries and associates mainly place their
           funds in banks for short terms, invest in foreign government bonds and maintain their liquidity.




                                                                      57
   Fiba Holding A.Ş. and its Affiliates
   Notes to the Consolidated Financial Statements
   As of and For the Year Ended 31 December 2005
   In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
   in YTL units current at 31 December 2005 pursuant to IAS 29




      29      Risk management disclosures (continued)
              The following tables provide an analysis of monetary assets and monetary liabilities of the Group into
              relevant maturity groupings based on the remaining periods to repayment:
                                                                                       2005
                                                            Up to 1           1 to 3       3 to 6       6 to 12     Over 1
                                         On demand          Month             Month        Month        Month        Year          Total
Monetary assets
Investments in debt securities                19,262          2,825         145,826      122,972      291,491     2,142,871    2,725,247
Other assets                                  16,078         99,637           1,166        1,717        2,377        15,250      136,225
Deferred tax assets                                -              -               -            -            -           511          511
Accounts receivable                                -         57,021          50,997       28,853        7,381             -      144,252
Due from related parties                           -              -               -          840            -        52,332       53,172
Deposits with other banks and
 financial institutions                      207,541      1,171,199                -       13,691            -           -     1,392,431
Financial assets held for trading             12,325          3,634           10,868       30,161       84,194      95,700       236,882
Derivative financial instruments                   -         15,243            7,029        5,010        8,944           8        36,234
Banking loans and advances to
 customers                                         -      1,683,469       2,458,116     1,803,381    2,194,298    3,614,495   11,753,759
Other money market placements                      -          8,676               -             -            -            -        8,676
Reserve deposits at Central Bank              21,742        932,907               -             -            -            -      954,649
Cash and cash equivalents                    114,681         11,188           1,741             -            -            -      127,610
Total monetary assets                        391,629      3,985,799       2,675,743     2,006,625    2,588,685    5,921,167   17,569,648
Monetary liabilities
Interest bearing loans and
 borrowings                                       -         181,349         443,138      830,845     1,329,761     445,957    3,231,050
Deferred tax liabilities                          -               -               -            -             -      33,453        33,453
Deposits from other banks                    13,165         313,503          20,713       17,866         2,896           -       368,143
Customers’ deposits                       1,617,076       5,777,681       1,349,084      519,121       202,236     353,387     9,818,585
Obligations under repurchase
 agreements                                          -      102,331                -       26,653            -            -     128,984
Derivative financial instruments                     -       21,699           46,123       29,300       37,036       94,693     228,851
Debt securities                                      -            -              891          819            -    1,441,066   1,442,776
Subordinated debt securities                         -            -                -            -            -      364,721     364,721
Provisions                                           -            -                -            -            -       55,365      55,365
Taxes payable on income                              -            -            1,706       27,239            -            -      28,945
Due to related parties                               -           58               97           58           17       26,762      26,992
Accounts payable and other
 current liabilities                          40,170     380,518            23,779         54,718       28,830       23,915      551,930
Total monetary liabilities                 1,670,411 6,777,139           1,885,531      1,506,619    1,600,776    2,839,319   16,279,795
Liquidity gap                             (1,278,782) (2,791,340)          790,212        500,006      987,909    3,081,848    1,289,853


                                                                                       2004
                                                        Up to 1              1 to 3         3 to 6      6 to 12      Over 1
                                         On demand       Month              Month          Month        Month          Year        Total
Monetary assets                             260,374 3,742,909            2,298,461      1,997,015    2,173,342    3,066,255   13,538,356
Monetary liabilities                      1,584,909 6,124,508            1,356,151        812,368    1,441,474    1,441,682   12,761,092
Liquidity gap                            (1,324,535) (2,381,599)           942,310      1,184,647      731,868    1,624,573      777,264




                                                                         58
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   29      Risk management disclosures (continued)
   29.3 Market risk
           The Group has established market risk operations and has taken the necessary precautions in order to
           hedge market risk within its financial risk management purposes, in accordance with the BRSA
           regulations.
           Based on the proposal of High Level Risk Committee, the Board of Directors of the Group determines
           risk management strategies and policies for managing market risk and ensures periodic monitoring of
           the application of strategies. The Board of Directors of the Group determines the risk limits by
           considering the primary risk factors and those limits are revised quarterly. Additionally, the Board of
           Directors of the Group requires risk management group and the top management of the Group to take
           necessary actions in order to identify, measure, control and manage the risks that the Group is exposed
           to.
           The market risk is measured by using an internal model developed with Value-at-Risk (VAR)
           methodology. VAR is calculated with three different methods, namely, ‘Historical Simulation’, ‘Monte
           Carlo Simulation’ and “Parametric Simulation”, “Bank Risk Tolerance” is determined in order to
           manage the market risk efficiently and to keep the market risk within the desirable limits. Risk
           Management Group monitors the VAR balances daily for compliance with the Bank Risk Tolerance.
           Periodic stress tests and scenario analysis are used to support results of VAR. Furthermore,
           conventional risk measurement methods such as cash flow projection, duration and difference analysis
           are also used.
           The market risk of the consolidated subsidiaries and associations are calculated in accordance with the
           Standard Method and reported quarterly in accordance with the market risk regulations. According to
           the project initiated on January 1, 2003, market risk measurement of the consolidated subsidiaries and
           associates are made with three different methods for the risk committee of the Group.
           The capital required for General Market Risk and Specific Risk is calculated and reported monthly in
           accordance with the Standard Method defined in the “Regulation on Measurement and Assessment of
           Capital Adequacy of Banks’’ issued by the BRSA.
   29.4 Currency risk
           The Group takes on exposure to effects of fluctuations in the prevailing foreign currency exchange
           rates on its financial position and cash flows.

           The Group enters into foreign currency forward transactions and swap transactions to decrease foreign
           currency position risk. The Group also engages in foreign currency and eurobond buy-sell option
           transactions.

           Position limit of the Group related with currency risk is determined according to Foreign Currency Net
           Position Standard ratio determined by BRSA.

           Consolidated subsidiaries and associates determine position limit related with currency risk as
           determined by local regulatory bodies. Subsidiaries established abroad conduct their operations in local
           currencies of the countries they are incorporated in.

           As of 31 December 2005, the Group’s foreign currency on balance sheet position, after considering
           swap transactions included in off-balance sheet position is YTL 3,144 thousand long position (2004:
           YTL 97,951 thousand short position). Group’s total net on and off balance sheet position is YTL
           31,166 thousand (2004: YTL 123,029 thousand short position).



                                                                      59
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   29      Risk management disclosures (continued)
           At 31 December 2005 and 2004, the currency risk exposures of the Group were as follows:
                                                                                                   2005
                                                                                                        Other
                                                                           US Dollar       Euro       Currencies           Total
           Foreign currency monetary assets
           Investments in debt securities                                   545,171     110,622             9,342       665,135
           Accounts receivable                                               39,691      11,009             2,753        53,453
           Due from related parties                                          52,332           -                 -        52,332
           Other assets                                                      22,281      24,431            20,419        67,131
           Deposits with other banks and
              financial institutions                                         814,450     449,328           20,912      1,284,690
           Financial assets held for trading                                 139,024       3,591                -        142,615
           Banking loans and advances to banks                             4,495,482   1,816,760          695,177      7,007,419
           Reserve deposits at Central Bank                                  648,023     139,297           61,990        849,310
           Cash and cash equivalents                                          34,059      23,286           18,999         76,344
           Total foreign currency monetary assets                          6,790,513   2,578,324          829,592     10,198,429
           Foreign currency monetary liabilities
           Interest bearing loans and borrowings                           2,695,897     467,427           31,213      3,194,537
           Deferred tax liabilities                                                       10,989            6,351         17,340
           Deposits from other banks                                          97,605      37,858           53,728        189,191
           Customers’ deposits                                             2,629,923   3,551,983          313,561      6,495,467
           Obligations under repurchase
               agreements                                                     28,472           -                 -       28,472
           Debt securities and subordinated
               debt securities                                             1,589,573     93,080           124,844      1,807,497
           Due to related parties                                             26,772          -                 -         26,772
           Taxes payable on income                                                          793               633          1,426
           Accounts payable and other
               current liabilities                                            89,706      58,810            23,574    172,090
           Total foreign currency liabilities                              7,157,948 4,220,940             553,904 11,932,792
           Net On Balance Sheet Position                                    (367,435) (1,642,616)          275,688 (1,734,363)
           Off Balance Sheet Net Notional Position                           298,069 1,435,339            (146,200) 1,587,208
           Net Open Position                                                 (69,366) (207,277)            129,488   (147,155)
                                                                                                   2004
                                                                                                        Other
                                                                           US Dollar       Euro       Currencies           Total
           Total foreign currency monetary assets                          5,706,637   2,643,036          475,714      8,825,387
           Total foreign currency liabilities                              4,664,045   4,612,636          376,828      9,653,509
           Net On Balance Sheet Position                                   1,042,592 (1,969,600)           98,886       (828,122)
           Off Balance Sheet Net Notional Position                       (1,346,243) 1,976,824             (19,848)      610,733
           Net Open Position                                               (303,651)     7,224              79,038      (217,389)

   29.5 Credit risk

           Credit risk represents the risk generating from the counter party's not fulfilling its responsibilities
           stated in the agreement either partially or totally. Credit Risk Management Committee is responsible
           for managing credit risk at the Group.




                                                                      60
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   29      Risk management disclosures (continued)
           Total amount of credits granted to a group is subject to certain credit risk limits. According to the
           decision taken by the Board of Directors of the Group, the maximum amount of the loan to be granted
           to a group (cash and non-cash) is limited with the calculation of certain percentages of the
           shareholders’ equity based on the rating of the group. Furthermore, concentration risk is monitored on
           monthly basis in terms of industry, rating, top 20 group and top 50 corporate customers.

           The credibility of the debtors of the Group is assessed periodically in accordance with the related
           regulation. The statements presenting the financial position of the borrowers are obtained in
           accordance with the related regulation.

           Loan limits of the loan customers are revised periodically in line with the Group’s procedures.

           The Group analyses the credibility of the loans within the framework of its loan policies and obtains
           collaterals for loans and other receivables.

           The Group has control limits over the positions of forward transactions, options and other similar
           agreements. The credit risk arising from these instruments are managed together with the risks
           resulting from market fluctuations. The Group monitors risks of forward transactions, options and
           other similar agreements and reduces the risk if necessary.

           The restructured and rescheduled loans are evaluated in The Group’s current rating system besides the
           follow up method determined in the related regulation.

           The share of the Group's receivables from its top 100 cash credit customers in its total cash loan
           portfolio is 28% (2004 - 42 %).

           The share of the Group's receivables from its top 100 non-cash customers in its total non-cash loan
           portfolio is 43 % (2004 - 44 %).




                                                                      61
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   29      Risk management disclosures (continued)
           Segment information for cash and non-cash loans is as follows:
                                                               2005                               2004
                                                           Cash      Non-cash                  Cash    Non-cash
           Financial institutions                     1,222,737       549,893             1,734,320     421,412
           Public sector                                337,302              -              328,564            -
           Agricultural                                 171,403        45,098               126,734      45,080
           Mining                                       265,779       181,615               307,639     246,663
           Production                                 1,580,072 2,003,616                 1,406,692 1,904,772
           Electric, gas and wages                       42,476        84,953                60,152      51,793
           Construction                                 578,323       730,549               496,280     522,957
           Wholesale and retail trade                 1,214,698 1,219,072                 1,037,631     967,593
           Hotel, food and beverage services            373,630        27,554               177,657      14,224
           Transportation and telecommunication         638,730       386,070               463,506     150,531
           Real estate and renting services              69,869         6,888                56,542       1,109
           Self-employment services                     130,240        55,680                77,705       7,129
           Education service                              1,987         1,078                 7,721       1,132
           Health and social services                    66,242         8,911                25,625       7,256
           Holding                                      136,146        16,401               252,057      46,662
           Other                                        303,317       184,837               420,234     198,220
           Corporate loans                            7,132,951 5,502,215                 6,979,059 4,586,533
           Consumer loans                             4,060,232              -            1,714,215            -
           Interest accruals                            186,244              -              153,538            -
           Loans in arrears                             276,436              -              160,003            -
           Provision for possible loan losses          (274,427)       (2,009)             (221,273)     (3,347)
                                                    11,381,436 5,500,206                  8,785,542 4,583,186

   29.6 Cash Flow and Fair Value Interest Rate Risk

           Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate
           because of change in market interest rates. Fair value interest rate risk is the risk that the value of a
           financial instrument will fluctuate because of change in market interest rates. The Group takes on
           exposure to the effects of fluctuations in the prevailing levels of market interest rates on both its fair
           value and cash flows.

           Interest rate risk that would arise from the changes in interest rates depending on the Group’s position
           is managed by the Asset/Liability Committee of the Group.

           Interest rate sensitivity of assets, liabilities and off balance sheet items is analyzed by top management
           in the Asset/Liability Committee meetings held weekly by taking the market developments into
           consideration.

           The management of the Group follows the interest rates in the market on a daily basis and revises
           interest rates of the Group when necessary.

           The assets and liabilities of the Group carry positive interest yield and assets and liabilities are repriced
           within an average of 3 months and 6 months, respectively. Consequently the Group carries limited
           interest rate risk.




                                                                      62
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   29      Risk management disclosures (continued)
           Besides customer deposits, the Group funds its long term fixed interest rate YTL consumer loan
           portfolio with long term (up to 10 years) floating interest rate foreign currency funds obtained from
           international markets. The Group changes the foreign currency liquidity obtained from the
           international markets to YTL liquidity with long term swap transactions (fixed YTL interest rate and
           floating foreign currency interest rate). The Group assigns these cross currency interest swaps as fair
           value hedges of a part of its fixed rate consumer loan portfolio

   29.7 Derivatives

           In order to control credit risks for derivative transactions Group sets limits for each counterparty. In
           addition to that the Group applies daily margining to reflect market changes to each transaction.

   29.8 Insurance risks

           The risk under an insurance contract is the risk that an insured event will occur including the
           uncertainty of the amount and timing of any resulting claim. The principal risk the Group faces under
           such contracts is that the actual claims and benefit payments exceed the carrying amount of insurance
           liabilities. This is influenced by the frequency of claims, severity of claims, actual benefits paid are
           greater than originally estimated and subsequent development of long term claims.

           The variability of risks is improved by diversification of risk of loss to a large portfolio of insurance
           contracts as a more diversified portfolio is less likely to be affected across the board by change in any
           subset of the portfolio, as well as unexpected outcomes. The variability of risks is also improved by
           careful selection and implementation of underwriting strategy and guidelines as well as the use of
           reinsurance arrangements.

           The majority of reinsurance business ceded is placed on a quota share basis with retention limits
           varying by product line and territory. Amounts recoverable from reinsurers are estimated in a manner
           consistent with the assumptions used for ascertaining the underlying policy benefits and are presented
           in the balance sheet as reinsurance assets and liabilities.

           Although the Group has reinsurance arrangements, it is not relieved of its direct obligations to its
           policyholders and thus a credit exposure exists with respect to reinsurance ceded, to the extent that any
           reinsurers is unable to meet its obligations assumed under such reinsurance agreements.

           The Group’s placement of reinsurance is diversified such that it is neither dependent on a single
           reinsurer nor are the operations of the Group substantially dependent upon any single reinsurance
           contract. There is no single counterparty exposure that exceeds 5% of total reinsurance assets at the
           balance sheet date.

           The business of Finans Insurance, a consolidated affiliate in the insurance segment comprises general
           insurance contracts.

           The Group principally issued the following types of general insurance contracts; motor, household
           insurance, commercial and business interruption.




                                                                      63
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   29      Risk management disclosures (continued)
           The table below sets out the concentration of the claims liabilities by type of contract.
           Claims liabilities at                                                    Reinsurers share of
           December 31, 2005                 Gross claims liabilities                 claims liabilities     Net claims liabilities
           Fire                                               3,246                                 881                     2,365
           Marine                                                810                                355                        455
           Accident                                          25,897                              4,526                     21,371
           Engineering                                        2,526                              2,042                         484
                                                             32,479                              7,804                     24,675
           For general insurance contracts the most significant risks arising from climate changes, natural
           disasters and terrorist activities. These risks vary significantly in relation to the location of the risk
           insured by the Group, type of risks insured and in respect of commercial and business interruption
           insurance by industry.

           The variability of risks is improved by diversification of risk of loss to a large portfolio of insurance
           contracts and geographical areas, as a more diversified portfolio is less likely to be affected across the
           board by changes in any subset of the portfolio.

           The variability of risks is also improved by careful selection and implementation of underwriting
           strategies, strict claim review policies to assess all new and on going claims, as well as the
           investigation of possible fraudulent claims. The Group also enforces a policy of actively managing and
           promptly pursuing of claims, in order to reduce its exposure to unpredictable future developments that
           can negatively impact the Company.

           The Group also has limited its exposure to the level by imposing maximum claim amounts on certain
           contracts as well as the use of reinsurance arrangements in order to limit exposure to catastrophic
           events,( for example hurricanes, earthquakes and flood damages). The purpose of these underwriting
           and reinsurance strategies is to limit exposure to catastrophes to a pre-determined maximum amount
           based on the Group’s risk appetite as decided by management. For a single realistic catastrophic event
           this maximum amount is approximately YTL 49,600 thousand calculated with a Probable Maximum
           Loss (“PML”) ratio of 7% as of 31 December 2005.

   30      Group enterprises
        The accompanying consolidated financial statements aggregate financial information from the
        following entities:
   30.1 Entities in Banking and Finance Segment (First consolidated under Finansbank; then consolidated under
           the Group).
           Name                                                                                   Nature of business
           Finansbank                                                                             Banking
           Finansbank Suisse                                                                      Banking
           Finansbank Holland                                                                     Banking
           Finansbank Russia Ltd (“Finansbank Russia”)                                            Banking
           Finansbank Romania SA (“Finansbank Romania”)                                           Banking
           Finans International Holding NV (“Finans International Holding”)                       Holding
           Finans Leasing                                                                         Leasing
           Finans Leasing SA (“Finans Leasing Romania”)                                           Leasing
           Finans Yatırım Menkul Değerler A.Ş. (“Finans Invest”)                                  Brokerage
           Finans Yatırım Ortaklığı A.Ş. (“Finans Investment Trust”)                              Investment trust



                                                                      64
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and For the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   30      Group enterprises (continued)
           Name                                                                     Nature of business
        Fiba International Financial Services Plc. (“Fiba IFSC”)                    Investment banking
        Finans Portföy Yönetimi A.Ş. (“Finans Portföy”)                             Asset management
        Finans Servicii Financiare SRL (“Finans Servicii”)                          Consumer finance
        Finansbank Malta Ltd (Finansbank Malta”)                                    Banking
        SC Finans International Leasing SA (“SC International Leasing”)             Leasing
        Finans Credit Ipotecar SA (“Finans Credit Ipotecar”)                        Mortgage financing
        Finans Leasing Russia Ltd (“Finans Leasing Russia”)                         Leasing
        Ibtech Uluslararası Bilişim ve İletişim
              Teknolojileri Araştırma, Geliştirme,
              Danışmanlık, Destek Sanayi ve Ticaret A.Ş. (“Ibtech”)                 Information technology
        Finans Broker De Asigurare SRL (“Finans Broker”)                            Insurance intermediary services
   30.2 Entities in Insurance Segment
           Name                                                                     Nature of business
        Finans Insurance                                                            Non-life insurance
   30.3 Entities in Factoring Segment
           Name                                                                     Nature of business
        Fiba Faktoring Hizmetleri A.Ş. (“Fiba Factoring”)                           Factoring
   30.4 Entities in Other Segment
           Name                                                                     Nature of business
           Finans Varlık Yönetimi A.Ş. (“Finans Asset Management”)                  Asset management
           All the Affiliates are registered in Turkey except for the following companies:
                                                                                    Country of
           Name                                                                     incorporation
           Finansbank Suisse                                                        Switzerland
           Finansbank Holland                                                       Netherlands
           Finansbank Russia                                                        Russia
           Finansbank Romania                                                       Romania
           Finans International Holding                                             Netherlands
           Finans Leasing Romania                                                   Romania
           Fiba IFSC                                                                Ireland
           Finans Servicii                                                          Romania
           Finansbank Malta                                                         Malta
           SC Leasing                                                               Romania
           Finans Credit Ipotecar                                                   Romania
           Finans Leasing Russia                                                    Russia
           Finans Broker                                                            Romania




                                                                      65
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and for the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29


           30        Group enterprises (continued)
           30.5    Affiliates
           The table below sets out all the Affiliates and shows their shareholding structure at 31 December 2005 and 31 December 2004:
                                                                        Direct and indirect       Controlling interest                              Proportion of effective   Proportion of effective
                                                                     controlling interest by   through shares held by                                ownership interest of     ownership interest of
                                                                    Fiba Holding and its          Özyeğin Family and     Proportion ofcontrolling    Fiba Holding and its       Özyeğin Family and        Proportion of effective
                                                                                  Affiliates            Fina Holding                     interest                Affiliates           Fina Holding           ownership interest
                                                                           31             31          31           31             31           31         31             31         31             31         31               31
                                                                    December December          December December          December December         December December         December December         December      December
            Name                                                         2005          2004         2005         2004          2005         2004        2005          2004        2005          2004        2005            2004

            Finansbank                                                  36.47         36.81        19.21        27.81          55.68       64.62        36.28        36.62        19.35        27.84        55.63          64.46

            Finansbank Suisse                                          100.00        100.00             -            -       100.00       100.00        36.28        45.18        19.35        37.58        55.63          82.76

            Finansbank Holland                                         100.00        100.00             -            -       100.00       100.00        36.28        45.18        19.35        37.58        55.63          82.76

            Finansbank Russia                                           98.00        100.00             -            -         98.00      100.00        35.56        44.27        18.96        37.58        54.52          81.85

            Finansbank Romania                                          89.72         81.40             -            -         89.72       81.40        32.54        31.66        17.22        24.83        49.76          56.49
 66




            Finans International Holding                               100.00        100.00             -            -       100.00       100.00        36.28        45.18        19.35        37.58        55.63          82.76

            Finans Leasing                                              59.25         87.85             -            -         59.25       87.85        21.50        32.18        11.46        24.45        32.96          56.63

            Finans Leasing Romania                                      97.50         97.50         2.50         2.50        100.00       100.00        30.90        39.84        17.85        32.83        48.75          72.67

            Finans Invest                                              100.00        100.00             -            -       100.00       100.00        36.37        36.73        19.30        27.79        55.67          64.52

            Finans Investment Trust                                     54.55         10.00             -            -         54.55       10.00        19.79         3.66        10.55         2.78        30.34           6.44

            Fiba IFSC                                                   99.94         99.94             -            -         99.94       99.94        36.26        45.15        19.34        37.56        55.60          82.71

            Finans Portföy                                              99.97         99.97         0.01         0.01          99.98       99.98        36.36        36.72        19.10        27.79        55.46          64.51

            Finans Servicii                                             99.01         99.01             -            -         99.01       99.01        35.93        44.74        19.16        37.21        55.08          81.95

            Finansbank Malta                                           100.00              -            -            -       100.00             -       36.92             -       19.15             -       56.07

            SC International Leasing                                    99.00              -            -            -         99.00            -       35.93             -       19.15             -       55.08               -

            Finans Credit Ipotecar                                      99.97         99.97             -            -         99.97       99.97        36.28        45.17        19.34        37.57        55.62          82.74

            Finans Leasing Russia                                      100.00              -            -            -       100.00             -       36.29             -       19.34             -       55.63               -

            Ibtech                                                      99.00              -            -            -         99.00            -       35.93             -       19.15             -       55.08               -

            Finans Broker                                              100.00              -            -            -       100.00             -       30.90             -       15.34             -       46.24               -
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and for the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29


           30        Group enterprises (continued)
                                                                        Direct and indirect       Controlling interest                              Proportion of effective   Proportion of effective
                                                                     controlling interest by   through shares held by                                ownership interest of     ownership interest of
                                                                    Fiba Holding and its          Özyeğin Family and     Proportion ofcontrolling    Fiba Holding and its       Özyeğin Family and        Proportion of effective
                                                                                  Affiliates            Fina Holding                     interest                Affiliates           Fina Holding           ownership interest
                                                                           31             31          31           31             31           31         31             31         31             31         31               31
                                                                    December December          December December          December December         December December         December December         December      December
            Name                                                         2005          2004         2005         2004          2005         2004        2005          2004        2005          2004        2005            2004

            Finans Insurance                                            70.74         70.75        19.26        19.25          90.00       90.00        70.20        35.26        19.67        32.00        89.87          67.26

            Fiba Factoring                                              93.55         93.54         4.95         4.95          98.50       98.49        93.55        93.54         4.95         4.95        98.50          98.49
            Finans Asset Management                                    100.00              -            -            -       100.00             -      100.00             -            -            -      100.00               -
            Finans Gayrimenkul Yatırım Ortaklığı A.Ş.                        -        71.65             -       28.35              -      100.00             -       40.63             -       39.41             -         80.04

           30.6      Investments in equity securities
           The table below sets out the associates and their shareholding structure at 31 December 2005 and 31 December 2004:

                                                                        Direct and indirect       Controlling interest                              Proportion of effective   Proportion of effective
 67




                                                                     controlling interest by   through shares held by                                ownership interest of     ownership interest of
                                                                    Fiba Holding and its          Özyeğin Family and     Proportion ofcontrolling    Fiba Holding and its       Özyeğin Family and        Proportion of effective
                                                                                  Affiliates            Fina Holding                     interest                Affiliates           Fina Holding           ownership interest
                                                                           31             31          31           31             31           31         31             31         31             31         31               31
                                                                    December December          December December          December December         December December         December December         December      December
            Name                                                         2005          2004         2005         2004          2005         2004        2005          2004        2005          2004        2005            2004
            Finans Gayrimenkul Yatırım Ortaklığı A.Ş.                   28.34              -       71.66             -       100.00             -       26.69             -       72.88             -       99.57               -

            RCT Varlık Yönetimi A.Ş.                                    24.97              -            -            -         24.97            -       24.97             -            -            -       24.97               -

           Sale of investments
           During 2005, shares of Marka Mağazacılık A.Ş. which was classified as securities available-for-sale (with net carrying value of US Dollar
           23,750,000) as at 31 December 2004 have been sold to Fina Holding at their carrying value.
Fiba Holding A.Ş. and its Affiliates
Notes to the Consolidated Financial Statements
As of and for the Year Ended 31 December 2005
In thousands of New Turkish Lira (“YTL”) as adjusted for the effects of inflation
in YTL units current at 31 December 2005 pursuant to IAS 29




   31      Subsequent events
   31.1 Corporate income tax is levied at the rate of 30% on the corporate income tax base of the year 2005.
        However, according to the draft “Corporate Tax Law” announced by the Ministry of Finance, the
        corporate tax rate will be reduced to 20% from 30% effective from the taxation periods starting from 1
        January 2006. If the draft law becomes effective, after the approval of the Parliament and the President,
        the corporate income will be levied at the rate of 20%.
   31.2 Finansbank signed an agreement with Japan Bank for International Cooperate Bank Ltd. amounting to
        US Dollars 20,000,000 and JPY 2,500,000,000 for the purpose of giving import loans to its customers.
   31.3 On March 15, 2006, Finans Holding sold its 20% of shares at Banque due Bosphore to Axa Group with
        sale price of Euro 4,401,985.
   31.4 On 4 April 2006, Fiba Group of companies (together with Fina Group of companies, which is
        controlled by Özyeğin Family) announced the sale of 46% of the ordinary shares and of 100% of the
        founder shares of Finansbank as of 31 December 2005, to National Bank of Greece (“NBG”) for US
        Dollar 2,774 million. NBG will pay US Dollar 2,323 million for 46% of the ordinary shares in
        Finansbank (valuing 100% of the ordinary shares at US Dollar 5,050 million) and US Dollar 451
        million for 100% of the founders’ shares. Fiba Group will remain as a shareholder with a 9.68%
        interest in the Bank and Husnu Ozyegin, the Chairman along with the executive management team will
        continue to hold their positions. The remaining 44.32% stake of Finansbank is owned by various local
        and foreign investors.

           The completion of the sale will be subject to the applicable legal approvals. Upon completion of the
           share transfer, NBG will undertake a Mandatory Offer based on the transaction’s implied US Dollar
           price per share for the remaining ordinary shares held by the minority shareholders. If NBG acquires
           less than a 4.01% additional stake in Finansbank during the Mandatory Offer, Fiba Holding and its
           affiliates will sell to NBG sufficient ordinary shares such that NBG will achieve a 50% (+1 ordinary
           share) ownership position in Finansbank. Fiba Group’s remaining 9.68% share is subject to
           performance based put and call arrangements with NBG. According to the agreement, Fiba Holding
           will take over the Finansbank’s 41.81% shares in Finansbank Romania and 100% shares in Finans
           International Holding which owns banks and financial institutions in Russia, Romania, Netherlands,
           and Switzerland at the date of the closing transaction.




                                                                      68

				
DOCUMENT INFO
Shared By:
Stats:
views:608
posted:9/6/2010
language:English
pages:70
Description: Federation International Basketball Association is held in the International Basketball Federation's international basketball tournament for men from 1950, women since 1953, male and female competitions were held. Previous match different intervals in some cases, the general term of 4 years. Since 1986, men's and women's competitions are conducted in the same year, also in accordance with the four-year term at the time.