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Compliance Regulations for Banks in Turkey: A Guide to Governance and Supervision

The Turkish banking sector is governed by a complex web of regulations designed to ensure the stability and security of financial institutions. This guide provides an overview of the key compliance requirements that banks operating in Turkey must adhere to.

Legislation

Turkey’s banking legislation is primarily governed by the Banking Law No. 5411, which sets out the general framework for banking activities, including licensing requirements, capital adequacy, and supervision. The Central Bank of the Republic of Turkey (CBRT) is responsible for implementing and enforcing this law, in addition to other regulatory bodies such as the Banking Regulation and Supervision Agency (BRSA).

Licensing

To operate a bank in Turkey, institutions must obtain a banking license from the CBRT. This involves meeting minimum capital requirements, demonstrating financial solvency, and satisfying certain prudential standards.

Prudential Requirements

Turkish banks are subject to strict prudential regulations, including:

  • Minimum capital adequacy requirements
  • Risk-based capital requirements
  • Liquidity ratios
  • Limits on large exposures
  • Credit risk management
  • Market risk management

Resolution Requirements

In the event of a bank failure, Turkey has implemented a number of measures to ensure stability and minimize disruption to the financial system. These include:

  • Deposit insurance schemes
  • Resolution frameworks for banks
  • Crisis management plans
  • Emergency liquidity assistance

The Turkish regulatory environment has evolved significantly in recent years, with a focus on strengthening prudential regulations and improving crisis management arrangements. The CBRT has also taken steps to enhance supervisory practices, including the introduction of stress testing and recovery planning requirements.

Note: This guide provides a high-level overview of the key compliance requirements for banks operating in Turkey. For more detailed information and practical guidance, please consult with relevant legal or regulatory experts.