Notes to the Consolidated Financial Statements for the Year Ended
31 December 2012
Information on the Bank’s internal capital requirements within the scope of the internal capital adequacy assessment process in order to
evaluate the adequacy of the approach in terms of current and future activities:
On-balance sheet and off-balance sheet financial risks and activities arising from financial assets and liabilities, against damage caused
by exposure to financial risk that are necessary to determine the level of capital and the determined level, taking into consideration the
specified minimum levels of statutory and internal continuity of the supply and monitoring process “Capital Adequacy Policy” implemented
within the framework by the Bank.
Capital adequacy level is monitored and analyzed taking into consideration the possible changes on economic conjuncture, risk factors,
balance sheet structure and size, profitability and, the dividend policy by the Bank. As for the level of capital adequacy with a view to a
forward-looking analysis and projection studies have an affect the Bank’s planning and decision processes.
Internal capital adequacy assessment process covers determining the risks to an internal perspective which are faced by the Bank and also
covers the necessary capital amount against the risks and evaluation within the framework of the principles and methods. This process
contains the assessments of capital adequacy under normal conditions and with the evaluation of working under stress conditions.
During the assessment of the Bank’s internal capital adequacy; in addition to credit risk, market risk and operational risk, considered to be
important by the Bank and for the other quantifiable risks, there are generally accepted methods of calculating capital requirements.
II. Explanations on Consolidated Credit Risk
Credit risk is defined as the possibility of incurring loss where the counterparty in a transaction, partially or completely fails to meet its
contractual obligations in due time in an agreement with the Group.
Banks and financial institutions affiliated to the Group, carry out their placement activities in accordance with the credit limitations
stipulated by legal regulations of the countries in which they operate.
The Parent Bank’s position against the credit risk limits defined by the current legislation is monitored by the Board. Within this framework,
loans extended to Risk Groups and the Parent Bank’s Risk Group, including the Parent Bank; loans in high amounts and limitations regarding
the shares in participations are monitored according to the limits determined in connection with the size of the shareholders’ equity
calculated on a bank-only and consolidated basis.
Credit risk limits of customers are determined depending on the financial situation and loan requirements of the borrowers, in strict
compliance with the relevant banking legislation, within the framework of loan authorization limits of Branches, Regional Offices, Loan
Divisions, the Deputy Chief Executives responsible for loans, the CEO, the Credit Committee and the Board of Directors. These limits may be
changed as may be deemed necessary by the Bank. Moreover, all commercial credit limits are revised periodically, provided that each period
does not exceed a year. Furthermore, the borrowers and borrower groups forming a large proportion of the overall placement are subject to
risk limits in order to provide further minimization of potential risk.
The geographical distribution of borrowers is consistent with the concentration of industrial and commercial activities in Turkey.
The distribution of borrowers by sector is monitored closely for each period and sectoral risk limits have been determined to prevent
concentration of risk in sectoral sense.
The credit-worthiness of customers is monitored on a consistent basis by using company rating and scoring models specially developed for
this purpose, and the audit of statements of account received is assured to have been made in accordance with the provisions as stipulated
by the relevant legislation.
The Parent Bank and its financial affiliates give utmost importance to ensure that loans are furnished with collaterals. Most of the loans
extended are collateralized by taking real estate, movable or commercial enterprise under pledge, promissory notes and other liquid assets
as collateral, or by acceptance of bank letters of guarantee and individual or corporate guarantees.
Non-performing and impaired loans has classified in accordance with the Regulation on Identification of and Provision against Non-
Performing Loans and Other Receivables (the Provisioning Regulation) published on the Official Gazette no.2633 dated 1 November 2006.
The detailed descriptions of these methods correspond with accounting practices, are included in Section Three Note VIII.
1...,215,216,217,218,219,220,221,222,223,224 226,227,228,229,230,231,232,233,234,235,...300