FINANCIAL INFORMATION AND RISK MANAGEMENT
TÜRKİYE İŞ BANKASI A.Ş.
Notes to the Consolidated Financial Statements for the Year Ended
31 December 2012
ANNUAL REPORT 2012
Non-cash Loans classified under Group I and Group II:
Letters of Guarantee
Letters of Credit
Underwriting Commitments of the Securities Issued
Factoring Related Guarantees
Other Guaranties and Warranties
b. Information on Derivative Financial Instruments:
Majority of the Group’s derivative transactions comprise foreign currency and interest rate swaps, forward foreign exchange trading,
currency and interest rate options. Even though some derivative transactions economically provide risk hedging, since all necessary
conditions to be defined as items suitable for financial risk hedging accounting are not met, they are recognized as “held for trading
purposes” within the framework of TAS 39 “Financial Instruments: Recognition and Measurement”.
c. Explanations Related to Contingencies and Commitments:
As of 31 December 2012, balance of the “Other Irrevocable Commitments” account, which comprised the letters of guarantees, guarantees
and commitments submitted by the Group pursuant to its own internal affairs, and guarantees given to third parties by other institutions
in favor of the Parent Bank and the commitments due to housing loans extended within the scope of unfinished house projects followed,
amounts to TL 8,040,797. As of 31 December 2012, liability of the Parent Bank regarding the cheques given to customers is presented
under off balance sheet commitments, as per the related regulations is amounting to TL 6,124,562. In case the cheques presented for
payment to beneficiaries are not covered, the Parent Bank will be obliged to pay the uncovered amount up to TL 615 (full amount expressed)
for the cheques that are subject to the Law numbered 3167 on “the Regulation of Payments by Cheque and Protection of Cheque Holders”,
and up to TL 1,045 (full amount) for the cheques that are subject to the “Cheque Law” numbered 5941. The uncollected amount will be
followed under “Indemnified Non-Cash Loans”.
On the other hand, according to the decision numbered 11-55/1438 dated 2 November 2011 of the Competition Board, investigation on
some enterprises in banking sector, including 12 banks and 2 financial services institutions, including the parent bank, allegedly violating
the fourth substance of Law numbered 4054 is continuing. As determined by Bank’s management all activities subject to investigation is in
conformity with the legislation, therefore, provided no provision as of 31 December 2012.
The Bank made payments (contribution) to “Türkiye İş Bankası A.Ş. Mensupları Munzam Sosyal Güvenlik ve Yardımlaşma Sandığı Vakfı “ which
is founded according to Turkish Commercial Law and Civil Law. The Bank made contribution for related legislation to fulfill its obligations to
the Foundation. In relation to the contributions made by the Bank Tax Audit Committee was conducted an inspection by their inspectors.
As a result of this review, the amount of the liability, at the time of payment, for the members of the foundation worker has an interest in
the nature of fee thus it comes to income tax withholding, penalty of payments / penalty to be stamp duty on the cut right on account of an
investigation report was prepared for the periods of 2007 and 2008. According to this report, to the Bank, penalize income tax / stamp duty
performed assessments in regarding to the mentioned period at the date 14.02.2013 the total 73.7 million income tax penalty notification
was notified. The evaluation of the subject that the Bank’s implementation is compliance with the legislation, there is no legal basis for the
tax administration’s suspended assessments, therefore, there is no provision need not considered and The Bank has used the legal rights of
that assessment. Therefore, no provision has provided as of 31 December 2012.
d. Explanations related to transactions made on behalf of or on the account of others:
It is explained in Note XIV under Section Four.