New Exemptions on FX Loans are introduced by the CBRT
Parallel with the recent amendments in FX borrowing of Turkish residents under the Decree No. 32 on Protection of the Value of Turkish Currency and the Capital Movements Circular, the Central Bank of the Republic of Turkey (the “CBRT”) introduced further exemptions recently in order to meet the real sector’s needs on FX borrowings with the initiation of the Undersecretariat of Treasury.
Recent Amendment to the Articles of Association of the Central Bank
Turkish FX legislation has seen piece-meal amendments over the past year for the purposes of bringing the real sector’s FX indebtedness under control. ın conjunction with the recent amendments, articles of association of the Central Bank of the Republic of Turkey (the “CBRT”) has been amended by the Council of Ministers via a decree (the “Decree”) on June 4, 2018 entered into effect upon its publication in the Official Gazette dated June 23, 2018 and numbered 30457.
Turkish Residents to Notify The Central Bank of their FX Positions
In line with the recent amendments to the Decree No. 32 on Protection of the Value of Turkish Currency (“Decree No. 32”), the Central Bank of the Republic of Turkey (“CBRT”) has enacted the Regulation on the Principles and Procedures regarding the Monitoring of Transactions Affecting Foreign Exchange Position by the Central Bank of the Republic of Turkey (the “Monitoring Regulation”) (published in the Official Gazette dated February 17, 2018 and numbered 30335) with a view to enable the CBRT to monitor the foreign exchange positions (“FX Positions”) of Turkish resident individuals and legal entities.
New Restrictions in the Turkish Foreign Exchange Legislation on Foreign Currency Loans
A decree and a communiqué amending the Decree No. 32 on Protection of the Value of Turkish Currency (published in the Official Gazette dated August 11, 1989, No. 20249) issued by the Council of Ministers under the Law No. 1567, (the “Decree No. 32”) and the Communiqué on Decree No. 32 on Protection of the Value of Turkish Currency (published in the Official Gazette dated February 28, 2008 and numbered 26801) (“Communiqué No. 2008-32/34”), are published by the Council of Ministers in the Official Gazette dated January 25, 2018.
Türk Yabancı Para Mevzuatında Döviz Kredilerine İlişkin Yeni Sınırlamalar
Bakanlar Kurulu tarafından 1567 sayılı Kanun uyarınca düzenlenen Türk Parası Kıymetini Koruma Hakkında 32 Sayılı Karar’da (11 Ağustos 1989 tarihli ve 20249 sayılı Resmi Gazete’de yayınlanmıştır) (“32 Sayılı Karar”) ve Türk Parası Kıymetini Koruma Hakkında 32 Sayılı Karara İlişkin Tebliğ’de (28 Şubat 2008 tarihli ve 26801 sayılı Resmi Gazete’de yayınlanmıştır) (“2008-32/34 Sayılı Tebliğ”) değişiklik yapılmasına ilişkin Bakanlar Kurulu kararı ve buna ilişkin tebliğ 25 Ocak 2018 tarihli Resmi Gazete’de Bakanlar Kurulu tarafından yayınlanmıştır.
Q4/2017 Amendment to the Regulation on the Procedures and Principles Regarding Fees to be Collected from Financial Consumers
The Banking Regulation and Supervision Agency (“BRSA”) amended the Regulation on the Procedures and Principles regarding the Fees to be Collected from Financial Consumers (published in the Official Gazette dated October 3, 2014 and numbered 29138) on December 23, 2017.
The amendment provides for an upper limit for fees charged (“Service Fee”) in return for transactions performed by financial consumers via third party ATMs (i.e. ATMs that belong to any financial institution in Turkey other than the respective financial consumer’s contracted institution at which the financial consumer’s relevant bank account is held (“Account Institution”). As such, the Service Fee is not to exceed 115% of the amount paid by the Account Institution to the third party institution, in return for the services provided via third party ATMs. The amendments also stipulate that the Service Fee will (i) be determined and specified under the framework agreement between the Account Institution and the financial consumer or (ii) be collected with the financial consumer’s consent during the transaction.
Q4/2017 Increase of the Invoice Value to be taken as a Basis for the Determination of a Loan Amount to the Vehicle Value Ratio
For the purpose of revising the limitations in loan amount to be extended to consumers under vehicle loans, asset backed loans secured with vehicles or financial leasing transactions related to vehicles (“Vehicle Financing”), the BRSA amended the Regulation on Loan Transactions of Banks (published in the Official Gazette dated November 1, 2011 and numbered 26333) and the Regulation on the Principles for the Incorporation and Operations of Financial Lease, Factoring and Financing Companies (published in the Official Gazette dated April 24, 2013 and numbered 28627) on December 12, 2017 with immediate effect.
Due to these amendments, the maximum loan under Vehicle Financing will be determined based on the invoice amount for the relevant vehicle. As such, the loan amount is not to exceed 70% of the final invoice amount of the respective vehicle if the final invoice amount is equal to or less than TRY 100,000. If the final amount is over TRY 100,000, the loan amount will not exceed the sum of 70% of the portion amounting to TRY 100,000 and 50% of the remaining portion exceeding TRY 100,000 under the respective invoice amount.
Q4/2017 Amendments to Central Bank Law and Cheque Law
The Law Amending Certain Tax Laws and Other Laws (Law No. 7061) (published in the Official Gazette dated December 5, 2017 and numbered 30261) (the “Law No. 7061”) has introduced certain amendments to the Law on the Central Bank of the Republic of Turkey (Law No. 1211) (published in the Official Gazette dated January 26, 1970 and numbered 13409) (the “CBRT Law”) and the Cheque Law (Law No. 5941) (published in the Official Gazette dated December 20, 2009 and numbered 27438) (“Cheque Law”).
Under the amendments to the CBRT Law, the Central Bank of the Republic of Turkey (the “CBRT”) is granted the authority to request any kind of information and documentation from individuals and legal entities, to be determined at the sole discretion of the CBRT, in order to monitor transactions that would impact the FX positions of the same. The Law No. 7061 stipulates that persons acting in violation of the procedures to be determined by the CBRT for these purposes shall be subject to judicial monetary penalty.
Furthermore, Law No. 7061 has also amended Provisional Article 3 of the Cheque Law. which prohibits the submission of future-dated cheques to banks for payment. The amendment aims to extend the duration of the prohibition on submission of future dated cheques until December 31, 2020.
Q4/2017 Amendment to the Regulation on the Merger, Transfer, Demerger, and Share Transfers of Banks
The BRSA amended the Regulation on the Merger, Acquisition, De-merger, and Share Transfers of Banks (published in the Official Gazette dated November 1, 2006 and numbered 26333) (the “Merger Regulation”) on November 16, 2017 with immediate effect.
The amendment allows an exception in the application of the Merger Regulation for the partial de-merger transactions of banks. In particular, the amendment to the Merger Regulation sets forth that partial de-merger transactions of banks where part of a bank’s assets are transferred to a third party without dissolution of the bank. In the exchange of shares and rights in the transferee, in a manner forming a subsidiary to the de-merging bank, it will not be subject to the provisions of the Merger Regulation. It should be noted that under the amended Merger Regulation, if the paid-in capital of the de-merged bank becomes less than the minimum capital requirement set forth under the Banking Law (Law No. 5411) (published in the Official Gazette dated November 1, 2005 and numbered 25983), the respective bank’s shareholders are to undertake to increase such paid-in capital of the de-merged bank within three months.
Q4/2017 Amendment to Secondary Legislation regarding Financial Lease, Factoring, and Financing Companies
The BRSA has amended the Regulation on the Principles for the Incorporation and Operations of Financial Lease, Factoring and Financing Companies (published in the Official Gazette dated April 24, 2013 and numbered 28627) (the “Financial Lease Regulation”) on October 21, 2017 with immediate effect.
The amendment aims to set forth certain requirements for interest-free operations of, financial lease, factoring or financing companies (the “Companies”).
In addition, the amendments provide that in order for the loan agreements entered into by the Companies operating on an interest-free basis to be taken into consideration as subordinated loans, the respective loan agreements are to comply with the interest-free basis.
In line with the amendment to the Financial Lease Regulation, other secondary legislation relating to the operations of Companies have also been amended to provide for the references made to “interest” is to be read as “profit share” with respect to the Companies operating on an interest free basis.