In March 2016, the Basel Committee on Banking Supervision
(BCBS) published separate reports assessing the compliance of
Turkish prudential rules with minimum Basel requirements in
relation to risk-based capital standards and the Liquidity
Coverage Ratio (LCR). This is also known as the RCAP
Assessment. Turkey received an overall compliant rating.
Throughout 2015 and early 2016, in the process of the RCAP
Assessment, the Banking Regulation and Supervisory Agency
(BRSA) made a number of amendments to the existing regulations
to improve compliance with the minimum standards.
Below are the key takeaways of the amendments to the LCR
framework, comprising the Regulation on Calculation of the
Liquidity Coverage Ratio of Banks (Regulation) and a set of
supplementary guidelines (LCR Framework).
Scope of application
Under the Basel standards, the LCR requirements must only be
applied to internationally active banks. In contrast, the
Turkish LCR framework applies to all commercial banks on both
an individual and a consolidated basis. A notable amendment
provides that lower ratios may be applicable to development and
High-quality liquid assets (HQLA)
Some of the requirements for qualification as HQLA are
prescribed under the guidelines instead of the Regulation.
However, the guidelines are assessed and concluded as binding
from a legal and practical point of view.
Overnight deposits to the Central Bank of the Republic of
Turkey via the interbank money market have been removed from
the list of eligible level 1 assets.
The debt instruments issued by the asset lease company
established under Law No 4749 on Regulating Public Finance and
Debt Management have been removed from the list of eligible
level 1 assets.
Run-off rates for less stable deposits
The BRSA has set a 10% run-off rate for less stable
deposits. Due to the importance of foreign currency deposits in
Turkey (45% of deposits placed in banks are in foreign
currency), the BRSA amended the regulation to classify foreign
currency deposits as less stable deposits. Therefore, currently
a uniform rate of 10% applies to all foreign currency deposits.
However, this run-off rate may be subject to further
adjustment, as the report draws attention to the BRSA's
declared intention to do an analysis of the historic foreign
exchange outflows to review the run-off rate.
The BRSA also requires banks to disclose foreign exchange
LCR information. In contrast, the Basel standards require
disclosure presented in a single currency only.
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