TÜRKİYE İŞ BANKASI A.Ş.
Notes to the Unconsolidated Financial Statements for the Year Ended
31 December 2012
ANNUAL REPORT 2012
IX. Explanations on Securitization Positions
X. Explanations on Credit Risk Mitigation Techniques:
Activities carried out by the bank that give rise to credit risk and collaterals are in accordance with the provisions of the relevant legislation.
However, effect of credit risk mitigation techniques is not taken into account in the determination of the capital adequacy ratio.
XI. Explanations on Risk Management Objectives and Policies
In addition to banking activities, activities of the entire the group as a whole is exposed to financial and non-financial risks which are
required to be analyzed, monitored and reported within specific risk management principles of the bank and with the perspective of Group
risk management. The risk management process is organized within the framework of risk management and serves the creation of a
common risk culture in corporate level; which brings “good corporate governance” to forefront, business units that undertaken risks and the
independence between the internal audit and surveillance units are established, risk is defined in accordance with international regulations
and in this context measurement, analysis, monitoring, reporting and control functions are carried.
Risk management process and the functions involved in the process is one of the primary responsibilities of the Board of Directors. The Risk
Management Department, which operates under the Board of Directors has been organized as Asset-Liability Management Risk Unit, Credit
Risk and Economic Capital Unit, Operational Risk and Model Verification and Subsidiary Risk Unit.
The Bank’s risk management process is carried out within the framework of risk policies which are set by recommendations of Risk
Management Department and issued by the Board of the Directors and written standards which contains risk policies and implemented by
These policies which are entered into force in line with the international practices are general standards which contains; organization and
scope of the risk management function, risk measurement policies, duties and responsibilities of the risk management group, procedures for
determining risk limits, ways to eliminate limit violations and approval and confirmation to be given in a variety of events and situations. The
scope and content of the Bank’s risk management system is given by the main risk types.
Credit risk is defined as the risk of the failure to comply with the requirements or failing to fulfill its obligations partially or totally of the
counter side of the transaction contract with the Bank. The methodology and responsibilities of the credit risk management, controlling and
monitoring and the framework of credit risk limitations specified with the credit risk policy.
The Bank defines, measures and manages credit risk of the all products and activities. Board of Directors review the Bank’s credit risk
policies and credit risk strategy on an annual basis as a minimum. Key Management is responsible for the implementation of credit risk
policies which are approved by Board of Directors.
As a result of loans and credit risks analysis all findings are reported to Board of Directors and Key Management on a regular basis. In addition
to transaction and company based credit risk assessment process, monitoring of credit risk also refers to an approach with monitoring and
managing the credit as a whole maturity, sector, security, geography, currency, credit type and credit rating.
In the Bank’s credit risk management, along the limits as required by legal regulations, the Bank utilizes the risk limits to undertake the
maximum credit risk within risk groups or sectors that the Board of Directors determines. These limits are determined such a way that
prevents risk concentration on particular sectors.
Excess risk limits up to legal requirements and boundaries limits are considered as an exception. The Board of Directors has the authority
in exception process. The results of the control of risk limits and the evaluations of these limits are presented by Internal Audit and Risk
Management Group to Key Management and Board of Directors.
The Bank uses credit decision support systems which are created for the purpose of credit risk management, lending decisions, controlling
the credit process and credit provisioning. The consistency of the credit decision support systems with the structure of the Bank’s activities,
size and complexity is examined continuously by internal systems. Credit decision support systems contain the Risk Committee assessment
and approval of Board of Directors.
Asset and Liability Management Risk
Asset-liability management risk defined as the risk of Bank’s incurring loss due to managing all financial risks, that are inflicted from the
Bank’s assets, liabilities and off-balance sheet transactions, ineffectively. Trading book portfolio’s market risk, structural interest rate risk
and liquidity risk of the banking portfolio; are considered within the scope of the asset liability management.
All principles and procedures related to the generating and management of asset and liability structure and “Risk Appetite” related to the
capital to be allocated, are determined by the Board of Director. Complying the established risk limits and being at the limits that stipulated
by the legislation are the primary priority of Asset-liability management risk. Risk limits are determined by the Board of Directors by taking
into consideration of the Bank’s liquidity, target income level and general expectations about changes in risk factors and risk appetite.