The need for the use of money as a financial resource in commercial life, the need to maintain increased money and valuable values obtained as a result of commercial transactions, has led people to set up banks and banking systems. According to the historical resources; these banks of thousands of years ago are not same as today's banking system , however suitable for the needs of the time.
Today, banking companies, which are almost indispensable in national and international commercial life, bank directors and employees, banking transactions, banking law in Turkey which constitutes the whole of the rules to which the superior institutions are subject has been structured in accordance by the legislation and the international banking system; international integration is provided by legislative changes in the light of current developments.
Especially in the "Financial Services Action Plan Report 2004" prepared by council of european targets have been set to bring similar solutions in similar problems by the audit authorities of the member states' banking and other financial institutions and to ensure coordination between the authorities responsible for the audit of banks engaged in cross-border transaction.
We state that we are based on European Union directives and the prinsiples of Basel Committee on Banking Supervision, federation, and taking into consideration especially the principle of transparency in international banking created by forums, International principles in our Banking Law No. 5411(published in 2005 in order to comply with the legislations of the other countries)and besides the standards, the jurisprudence , doctrine and court decisions.
In the world, there are a lot of international treaties and more than one international organizations that they have concluded with the countries close to the borders of the countries, and where they have strong economic relations in the field of the economi and finance.
In financial markets; trust is provided by establishing clear and comprehensive market standards, reduction of financial crimes, establishment of markets with sufficient depth and liquidity, establishing systems that adapt to national and international changes and give confidence to investors, public disclosure, making arrangements for the behavior of actors of financial market, providing sufficient, understandable, accurate and timely information to the markets, developing of accounting and reporting practices in accordance with international standards.providing In addition, providing to ensure the effective functioning of the credit system and protection of the rights and benefits of the savings depositors are issues that affect the trust in the financial markets.
It is possible to say that principles which are followed by the banking legislation of the Republic of Turkey and regulation of the law amendment especially in the light of the international authority principles that we have mentioned below and developments are followed.
-Basel Committee on Banking Supervision (BCBS)
-International Accounting Standards Committee (IASC)
-International Federation of Accountants (IFAC)
-Organization for Economic Cooperation and Development (OECD)
-International Monetary Fund (IMF)
-International Organization of Securities Commissions (IOSCO)
-Financial Stability Forum (FSF)
-International Association of Insurance Supervisors (IAIS)
-The World Bank
The the applicable law No. 5411 is the basic law of the banking law. Code of Central Bank of Republic of Turkey, Turkish commercial code, Turkish civil code, Turkish code of obligations, capital markets law, bank and credit cards law, financial lease, Factoring and Financing Companies Law, Payment and Securities Agreement Systems, Law of Payment Services and Electronic Money Institutions, enactments, legislations, precedents are also the sources of the banking law.
The Banking Law has been prepared with the aim of ensuring trust and stability in financial markets, operating the credit system effectively, protecting rights and benefits of savers and arranging the necessary procedures and principles.
Considering the impact of capital resources of the financial sector on economic growth by actively directing them, it is possible to say that are the main power of the economic growth and stability.
BANKING LAW NO 5411
In the 170. article of the Banking Law No. 5411, it is regulated that the articles 90 and 91 of the law will entry into effect within two months from the publication date. It is regulated that sub-articles B, C, D, E of Article 168 will entry into effect on 01.01.2006 and other articles of the law will entry into effect on the date of publication, that is, on 01/11/2005.
Many amendments have been made to the articles of the law since entry into effect date.It is possible to say that the Law has been amended 29 times with the annulment decision made by the Constitutional Court.
Institutions subject to the Banking Law:
the deposit banks in Turkey mentioned in the article 2 of the law No. 5411, participation banks, development and investment banks, branches in Turkey of such institutions that established abroad, financial holding companies, bank association of turkey, the participation banks association of turkey, banking regulation and supervision agency (brsa ), saving deposit insurance fund and activities of these banks are subject to the Banking Law. The Banking Law is applied for the banks established with special laws, without prejudice special provisions implied by their special law. In cases where there is no provision in the law, general provisions will be applied.
The purview of law has been extended to include financial holding companies, associations, BDDK(brsa) and TMSF. It is seen that the provisions regarding the regulation and supervision of independent auditing, support and service institutions have been established.
In order to adapt to the international term ; development and investment bank, fund bank, participation bank, financial institution, financial holding company, main branch, supervision, qualified share, controlling shareholder, executives, saving deposits, private checking account, participation account, participation fund, support service organizations, offshore banking, concepts such as these have been added to the law.
Banking Transactions:
Law No. 5411 article 4- Banks, without prejudice to the provisions stipulated in other laws, may carry out the following activities:
a) Deposit acceptance.
b) acceptance of Participation fund
c) all kinds and forms of cash and non-cash loan transactions
d) Cash and registered payment and fund transfer transactions, correspondent banking or All kinds of payment and collection transactions including the use of cheque accounts.
e) Allocation transactions of checks and negotiable instruments.
f) custodian services
g) Credit cards, debit cards, flotation of pecuniary means such as traveler's checks and procedures for conducting related activities
h) Foreign exchange transactions including effective; purchasing and selling money market instruments; purchasing, selling or conservation of precious metals and stones.
i) Based on economic and financial indicators, capital market instruments, commodities, precious metals and foreign currency; purchase, sale and brokerage transactions of futures contracts, option contracts, simple or complex financial instruments containing more than one derivative instrument,
j) purchase and sale of capital market instruments and repurchase or resale promissory transactions,
k) brokerage operations in the sale of capital market instruments through issuance or public offering,
l) Execution of trading transactions for brokerage purposes, of capital market instruments previously issued,
m) assurance in favor of others, warranty works, such as transactions for undertaking guarantees and other liabilities.
n) investment advisory services/ investment advisory procedures(?)
o) portfolio management
p) within the frame of obligations under the contracts established by undersecretariat of the treasury and/or central bank and its associations; market making for trading transactions.(?)
r) Factoring and forfaiting transactions.
s) brokerage of money transactions in the interbank market
t) Financial leasing transactions.
u) Insurance agency and personal pension intermediary services.
v) Other activities to be determined by the Board.
Deposit banks may not perform the activities specified in the first paragraph (b) and (t), participation banks (a), development and investment banks (a) and (b).
Establishment of the Bank:
In 6 article of law No. 5411, legal prosedures to be followed by the bank to be established within the borders of the Republic of Turkey or the bank established abroad to open a branch in Turkey was arranged.
Establishment; or permission to open branches and representative agency in Turkey.
Article 6- Establishment of a bank in Turkey or the opening a first foreign branch in Turkey of a bank established abroad, provided that the conditions stipulated in this Law are fulfilled, will be permitted with the decision that is taken by the votes of at least five members of the board in the same direction.
Applications for permit and procedures and principles for granting permission are determined by the to be bylaw issued by the Board. Decision on permit; in case the application is made or there is a deficiency in the application, are notified to the concerned within three months from the date of completion of deficiencies.If the deficiencies are not completed within six months, the application becomes invalid.
Establishing bank to be engaged exclusively in offshore banking activities in Turkey or opening branches for this purpose by banks established abroad, discontinuation of their area of activity and financial reporting and supervision procedures and their activities either temporarily or permanently are determined by the decision of the committee.
Banks established abroad, provided they do not accept deposits or participation funds and Provided that it operates according to the principles to be determined by the Board with the permission of the Board may open a representative agency in Turkey.
In the borders of the Republic of Turkey, as understood from the text of the article for the establishment of a new bank or to open the first branch of a bank with headquarters abroad, The Banking Regulation and Supervision Agency must have got permission.
Requirements for the Bank Establishment:
Establishment Requirements of banks are listed in the 7. article of the Law No. 5411. In the 7. article, the Requirements for the founders are listed.
1-Establishment as a joint stock company,
2- Issuing of stock certificates for cash and all of them to must be registered,
3-The founders must have the Requirements specified in this Law,
4-The members of the Board of Directors must have the qualifications specified in the corporate governance provisions of this Law and have professional experience to maintain the planned activities
5-accordance of the foreseen activity subjects with the planned financial, management and organizational structure,
6-paid capital stock of cash and away from all kinds of collusion must be at least thirty million New Turkish Liras,
7-accordance of the founding charter with the provision of law
8-having a transparent and open partnership structure and organization chart that will not hinder the effective supervision of the institution
9-issues must have not been that would hinder the consolidated supervision,
10-Business plans for the foreseen areas of activity, including the capital adequacy of the projections related to the financial structure of the organization, it is obligatory to submit an activity program showing the budget plan and structural organization for the first three years, including the internal control, risk management and internal supervision system.
full paid capital stock for development and investment banks cannot be less than 20.000.000 TL.
Requirements that founders must have:
article 8- Banks' cofounders;
a) According to the provisions of the Enforcement and Bankruptcy code No. 2004, not being bankrupt, not declaring concordat, not being approved structuring application for compromising or not been decided to postpone bankruptcy,
b)having no qualified shares in banks where article 71 of this Law is applied or in the banks transferred to the Fund before the enactment of this Law, or having no control,
c) in financial institutions that are subject to compulsory liquidation other than voluntary liquidation and bankers who are liquidated, in development and investment banks whose operating license has been revoked, in the bank whose partnership rights and management and supervision,except dividends, have been transferred to the fund, or in credit institutions whose permissions and powers of accepting deposits and participation funds have been revoked, before permit and power of banking and accepting deposits and participation fund and the transfer to the funds are withdrawn, having no qualified shares or having no control(?)
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e)Having financial power and reputation,
f)Having the honesty and competence required by the job,
g)In case of being a legal entity, having the partnership structure together with the risk group is transparent and open,
are required.
Banks' legal entity cofounders must directly or indirectly have the requirements specified in paragraphs (a), (b), (c), (d), (e) and (f) of the first paragraph of this article.
substance of the first paragraph (b) and (c) shall not apply to multilateral credit organizations and financial institutions that established by international agreements to which Turkey is a part of.
Requirements of banks that located abroad with the central office, regulated in Law No. 5411, to open branches in Turkey:
article 9-banks that established abroad willing to operate by opening branches in Turkey must have the following conditions, getting permission within the framework of the principles and procedures set by the Board.
a) In the country where the center is located, there should not be a ban on the main activities.
b) The bank's supervisory authority in the country where they are headquartered, must have no negative opinion regarding its activities in Turkey.
c) Turkey allocation of paid up capital cannot be not less than the amount specified in the Article 7.
d) Members of the board of directors must have the requirements specified in the corporate governance provisions and professional experience that can carry out the planned activities.
e) It must have been present an activity program showing the business plans of the activity subjects covered by the permit, the budget plan and the structural organization for the first three years.
f) The partnership structure of the group in which it belongs is required to be transparent and open.
If the activity is forbidden due to the violation of local regulations in the country where the center is located, activity permit is not granted on these issues.
Documents listed in the fourth or fifth article of the regulations to establish a new bank or to open first branch in Turkey of bank that established in abroad, should be completed. Then, these documents must be submitted to the Banking Regulation and Supervision Agency and an application must be made for permission.
The BRSA application must decide by examining the documents within 3 months from the date of application. If there is a deficiency, within 3 months from the date of completion of the deficiencies must decide.It is enough that at least five members of the Board, which consists of seven members, have voted for approval.The decision on permission is published in the Official Gazette and in the weekly bulletin of the BRSA.
However, it is not enough to have the establishment of bank's or the first branch permission of the foreign bank.No later than the end of the ninth month from the publication of the Board decision regarding the establishment permission in the Official Gazette, it is obligatory to complete the registration and announcement of the Trade Registry and to apply to the Board again to obtain an activity permit.
The activity permit become valid as of its publication in the Official Gazette.
The Board may limit the applicant's areas of activity provided that it explains the reason.
OFF SHORE- BANKING
OFFSHORE- BANKING is defined in Law No. 5411.
OFFSHOR-BANKING : Banking activities, are limited to outside the country of establishment or not subject to economic and financial legislation applied across the country or refers to banking in which the acceptance of deposits and funds from those residing in the country of residence is prohibited.
To open a separate branch for offshore banking activities by a bank that established in Turkey, or the establishment of a bank to operate only in offshore banking, or to open a branch for offshore activities by the foreign bank are possible with the decision of the Board and permission is required.
Differences of Offshore Banks from other banks:
Freedom to determine interest rates, foreign currency transaction, exemption from restriction and control to which local banks are subject, income or corporate tax exemption or determination of the rate too low, no withholding deduction from interest and interbank transactions to be paid to customers, transactions with individuals and organizations that are not located in the country where they are established, operating in a free zone, confidentiality obligation is important.
Similar aspects of offshore Banks to other banks:
It performs deposit collection, loan or conducting classic banking activities however this service is provided to real persons and institutions that are not located in the country where they are established.
The taxation method of offshore Banks income in Turkey:
Deposit revenues from offshore banks should be taxed by counting earnings obtained abroad, taking into account the limits contained in the legislation. There may be exceptions and differences in some periods