INTRODUCTION
ACTIVITIES
CORPORATE GOVERNANCE
FINANCIAL INFORMATION AND RISK MANAGEMENT
TÜRKİYE İŞ BANKASI A.Ş.
Notes to the Consolidated Financial Statements for the Year Ended
31 December 2012
209
İŞBANK
ANNUAL REPORT 2012
While the Parent Bank and Türkiye Sınai Kalkınma Bankası A.Ş., one of the consolidated subsidiaries, use their own foreign currency
exchange rates for their foreign currency transactions, other institutions residing domestically use the CBT rates for their foreign currency
transactions.
Assets and liabilities of the foreign branches of the Parent Bank and financial institutions that have been established abroad are converted
into TL by using the prevailing exchange rates at the balance sheet date. Income and expenses are converted by at exchange rates at the
dates of the transactions. Incomes and expenses of foreign financial institutions are converted into TL at average foreign currency rates as
long as there is not a significant fluctuation in currency rates during the period. The exchange rate differences arising from the conversion
are recorded in the “Other Profit Reserves” account under the shareholders’ equity.
III. Explanation on the Consolidated Companies
1. Basis of Consolidation:
The consolidated financial statements have been prepared in accordance with the procedures listed in the “Communiqué Related to
Regulation on the Preparation of the Consolidated Financial Statements of Banks” published in the Official Gazette numbered 26340 dated
8 November 2006.
a.
Basis of consolidation of subsidiaries:
A subsidiary is an entity that is controlled by the Parent.
Control is the power of the Parent Bank to appoint or remove from office the decision-taking majority of members of board of directors
through direct or indirect possession of the majority of a legal person’s capital irrespective of the requirement of owning minimum fifty-
one per cent of its capital; or by having control over the majority of the voting right as a consequence of holding privileged shares or of
agreements with other shareholders although not owning the majority of capital.
As per the “Communiqué Related to the Preparation of Consolidated Financial Statements of Banks” published in the Official Gazette
numbered 26340 dated 8 November 2006, as at the current period, the Parent Bank has no subsidiaries, qualified as credit institutions or
financial institutions, excluded from consolidation. Detailed information about the consolidated subsidiaries is given in Section Five, Note
I.h.3.
Under full consolidation method, the assets, liabilities, income and expenses and off-balance sheet items of subsidiaries are combined with
the equivalent items of the Parent Bank on a line-by-line basis. The book value of the Parent Bank’s investment in each of the subsidiaries
and the Group’s portion of equity of each subsidiary are eliminated. All significant transactions and balances between the Parent Bank
and its consolidated subsidiaries are eliminated reciprocally. Non-controlling interests in the net income and in the equity of consolidated
subsidiaries are calculated separately from the Group’s net income and the Group’s shareholders’ equity. Non-controlling interests are
presented separately in the balance sheet and in the income statement.
In preparing the consolidated financial statements, if a subsidiary uses accounting policies other than those adapted by the Parent
Bank, appropriate adjustments are made to subsidiaries’ financial statements. Within this framework, there is no itemwhere a different
accounting policy is applied.
TFRS 3 “Business Combinations” standard prescribes no depreciation to be recognized for goodwill arising on the acquisitions on or after
31 March 2004, realizing positive goodwill as an asset and application of impairment analysis as of balance sheet dates. In the same
standard, it is also required from that date onwards that the negative goodwill, which occurs in the case of the Group’s interest in the fair
value of acquired identifiable assets and liabilities exceeds the acquisition cost to be recognized in profit or loss.
Details of positive goodwill arising from Group’s investments to its subsidiaries in investment basis are as follows:
Name of the Investment
Amount of the Positive Consolidation Goodwill
İş Finansal Kiralama A.Ş.
611
Türkiye Sınai Kalkınma Bankası A.Ş.
4,792
Anadolu Anonim Türk Sigorta Şirketi
1,767
CJSC İşbank
28,804
Total
35,974
b.
Basis of consolidation of associates:
An associate is a domestic or foreign entity which the Parent Bank participates in its capital and over which it has a significant influence but
no control.
Significant influence is the power to participate in the financial and operating policy of the investee. If the Parent Bank holds qualified
shares in the associate, it is presumed that the Parent Bank has significant influence unless otherwise demonstrated. A substantial or
majority ownership by another investor does not necessarily preclude the Parent Bank from having significant influence.
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