Turkey’s Banks Required to Establish Remuneration Committee

Strengthening Corporate Governance in Turkey’s Banking Sector

Ankara, Turkey - The Turkish government has introduced new regulations requiring banks operating in the country to establish a remuneration committee. This move is aimed at ensuring transparency and fairness in the compensation of bank employees.

Composition and Responsibilities of the Remuneration Committee

According to the regulation, each bank must set up a remuneration committee comprising at least three members, including an independent chairperson. The committee will be responsible for reviewing and approving executive compensation packages. Additionally, the committee will ensure that bonuses are not excessive and do not pose a risk to the bank’s stability.

Significance of the Move

The move is seen as a significant step towards strengthening corporate governance in Turkey’s banking sector. It comes at a time when the country is seeking to improve its financial regulatory framework and enhance transparency in the sector.

In related news, Turkish banks have also been required to establish robust anti-money laundering (AML) and countering the financing of terrorism (CFT) measures to combat illicit finance. The Financial Action Task Force (FATF) has been working with Turkey to implement AML/CFT regulations, which include:

Customer due diligence
Enhanced due diligence for high-risk clients
Ongoing monitoring
Document-keeping

Additional Measures

The Turkish government has also introduced a depositor protection regime, which safeguards depositors’ rights and ensures the stability of the banking system. The scheme is funded by bank contributions and provides cover up to TRY400,000 per depositor in the event of a bank failure.

Furthermore, Turkey’s central bank has established a comprehensive regulation on sharing secret information to ensure that banks comply with data protection requirements.

Expected Outcomes

The new regulations are expected to enhance transparency and stability in Turkey’s banking sector, making it more attractive to foreign investors and promoting economic growth.