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Turkey’s Banking Regulations Align with EU Standards

Turkey’s banking regulations and supervisory practices have been found to be largely equivalent to those of the European Union’s (EU) Capital Requirements Regulation (CRR). Here are some key points summarizing the similarities and differences between Turkey’s banking regulations and CRR provisions.

Credit Risk

Credit Risk Exposures

• Turkish legislation on credit risk exposures is based on CRR provisions.
• Minimum risk retention requirements and investor due diligence are included in Turkish regulations.

Securitization Rules

• Securitization rules in Turkey are also based on CRR provisions, but do not consider the IRB Approach due to a small and limited securitization market.

Credit Risk Mitigation

• Domestic rules for credit risk mitigation techniques are detailed transpositions of CRR requirements with some matching provisions.

Counterparty Credit Risk (CCR)

Current Regulations

• Turkish regulations on CCR are “Largely Equivalent” to CRR provisions, but differences exist in detailed issues.
• The current regulations will likely be comparable to CRR provisions after the new CCR provisions are implemented.

Market Risk

• Regulations on market risk in Turkey are also “Largely Equivalent” to CRR provisions.

Operational Risk

• Turkish regulations on operational risk are equivalent to CRR provisions, with some differences in details.

Conclusion

While there may be some minor differences and nuances, Turkey’s banking regulations and supervisory practices are largely aligned with EU standards. This demonstrates a high level of equivalence between the two regulatory frameworks, which is beneficial for financial institutions operating in both jurisdictions.