The Communiqué Regarding the Maximum Interest Rates to be Imposed on Credit Card Transactions was enacted on 12 June 2009 to enter into force as of 1 June 2009. Accordingly, the monthly maximum contractual interest rate and monthly maximum default interest rate for Turkish lira debts arising from credit cards have been reduced.
Decree No. 32 Regarding the Protection of Value of Turkish Currency was amended on 16 June 2009. The most noteworthy change is the addition of a new provision which enables Turkish banks to provide foreign currency loans to Turkish residents provided that the average maturity of each loan is more than one year and the loan amount is more than USD5mn. On the other hand, following these amendments Turkish residents can now only obtain foreign indexed loans from Turkish banks for commercial or professional purposes, which means that Turkish banks can no longer provide foreign indexed consumer loans.
The Law on Public Finance and Debt Management was amended on 17 June 2009. Amendments include provisions for the avoidance of negative outcomes from the global financial crisis through the expansion of financial opportunities and the effective processing of credit systems for companies. Accordingly, cash up to TL1bn will be allocated to companies in order to guarantee loans and specially arranged domestic government bonds will be issued.
The Decree Regarding the Principles of Equivalence Reserved by Financial Leasing, Factoring and Financing Companies for their Receivables was amended on 15 April 2009. The amendments include new provisions for customers with more than one debt. The new principles are applicable to such customers until 1 March 2010.
The Communiqué Regarding Financial Leasing, Factoring and the Principles of the Establishment and Activities of Financing Companies was amended on 26 June 2009. Accordingly, real estate forming the subject matter of financial leasing contracts may now be transferred following the end of the second year of the agreement term without waiting until the end of the minimum four-year period, provided that the discharge of all risks borne by the lessor is agreed by the parties, and the Banking Regulatory Supervisory Agency is notified of such transactions.
The difficulties facing Turkish banks in providing foreign currency loans to Turkish residents subject to certain exemptions is a known drawback in terms of competing with foreign banks in the commercial loan market. This has forced these banks to provide foreign currency loans through their foreign branches, which have often been funded from their Turkish headquarters or called for such branches to utilise sizeable loans in order to meet their funding requirements. The Council of Ministers attempted to level the playing field by giving Turkish banks the option to provide large scale foreign currency loans to Turkish residents subject only to the restrictions of a minimum amount and maturity. Nevertheless, it remains to be seen whether this effort will be sufficient for Turkish banks to compete with foreign banks given that interest and fees in relation to loans from Turkish banks are subject to 5% Banking and Insurance Transactions Tax ("BITT") whereas loans from foreign banks are generally exempt from all taxes and levies and naturally are not subject to such BITT.
The Regulation Amending the Regulation Regarding the Measurements and Assessment of the Liquidity Adequacy of Banks was enacted on 23 January 2009. A provisional article to be effective from 26 January 2009 until 26 July 2010 has been added with respect to the calculation of foreign currency liquidity adequacy ratios. This provisional article suggests that the assets and liabilities indexed to foreign currency will be considered at their foreign currency values for a period of 18 months. However, asset and liabilities indexed to foreign currency will be taken into consideration at their Turkish lira values for the calculation of total liquidity adequacy ratio.
The Regulation Amending the Regulation Regarding the Classification of Loans and Other Receivables by Banks and the Reserves to be Set Aside in Consideration of Loans and Other Receivables was enacted on 23 January 2009. This regulation has introduced new provisions on the classification of loans based on the non-payment duration of their repayments, along with other provisions amending the scope of the loan groups.
The Regulation has also introduced new provisional articles, to be effective until 3 March 2010, in relation to the effects of a frozen receivable for customers with multiple loans, the restructuring of loans according to their classification, the temporary illiquidity of borrowers and the rules to comply with during the restructuring period of loans in order to benefit from redemption plans.
The banking legislation, which was tightened following the financial crisis of 2001, has become too tight to minimise the exposure of banks to the global crisis. Official authorities, including the BRSA, have expressed their intention to bend the legislation as much as they can in order for the Turkish banking system to get through this rough patch.
Reserves that should be allocated to bad debts and classification of bad debts, as well as liquidity requirements, seem like the most pressing areas and are the focus of the regulatory authorities.
Conditional amnesty for those on the blacklist of the Central Bank, which in effect makes finding financing for these persons nearly impossible, is also on the agenda of the Government.