Turkey passes new Banking Regulatory and Supervisory Board decision for COVID-19

Turkey

On 26 March 2020, the Turkish Banking Regulatory and Supervisory Board (Bankacılık Düzenleme ve Denetleme Kurulu or “BRSB”) published a decision on exemptions regarding the liquidity obligations of banks.

The decision should enhance the flexibility of Turkey's banks to meet minimum liquidity-level rates during the Coronavirus (COVID-19) crisis.

Further to the decision, the following measures will remain in force until 31 December 2020.

  • Deposit and participation banks will be exempted from Article 32 of the Regulation on Calculation of Liquidity Coverage Ratio of Banks for meeting liquidity coverage ratio obligations.
  • According to Article 32, if total and foreign currency liquidity coverage ratios are lower or expected to be lower than the rates determined in the above regulation, the reasons and any planned actions must be reported to the Banking Regulation and Supervision Agency (“BRSA”) immediately. Any unconformity in the total and with foreign currency liquidity coverage ratios must be resolved within two (2) weeks. Total unconsolidated and foreign currency liquidity coverage ratios cannot be inconsistence/shortfall more than six (6) times within one (1) calendar year, including the eliminated inconsistency/shortfall. In a calendar year, two (2) inconsistencies/shortfalls may not be carried out consecutively in the consolidated total and foreign currency liquidity coverage ratios, and no more than two (2) inconsistencies/shortfalls may be achieved, including the eliminated inconsistency/shortfall.
  • Within the context of Article 31 of the regulation, banks will continue to report to the BRSA.
  • Participation and development banks will be exempted from Article 15, paragraph 1, 2 and 3 of Regulation on the Calculation and Evaluation of the Liquidity Adequacy of Banks for meeting liquidity coverage ratio obligations.
  • According to Article 15, in a calendar year, two (2) consecutive inconsistency/shortfall cannot occur in the rates for second maturity segments (vade dilimleri). If the rates for the first and second maturities are less than the rates specified in the regulation, the banks are obliged to send their reasons to the BRSA along with their notification charts (bildirim cetvelleri). Any unconformity occurring in the rate related to the first maturity segment must be resolved within two (2) weeks. In a calendar year, there cannot be more than six (6) inconsistencies/shortfalls in the rate associated with the first maturity segment, including the eliminated inconsistency/shortfall.
  • These banks will continue to report to the BRSA within the context of Article 14, paragraph 2 of Regulation on the Calculation and Evaluation of the Liquidity Adequacy of Banks.
  • In order to reduce the operational burden on banks, development and investment banks will be exempted from reporting obligations to the BRSA regarding liquidity coverage ratios.

For more information about the decision, contact your regular CMS advisor or local CMS experts: Dr. Döne Yalçın or Alaz Eker Ündar.