New application instruction from the Central Bank to banks

The Central Bank shared with the banks the implementation instruction regarding the new regulation aiming to increase the TL ratio in the balance sheets of banks.

The formula to be used in the application, which gives new targets to banks for their obligation to hold securities and rewards banks that meet their TL target between 60-70%, is also included in the instruction.

In the statement made by the CBRT, with the change in the communiqué on the scope of liabilities subject to securities establishment on 31 December 2022 and with the amendment made in the Communiqué (Communiqué) on Securities Establishment published on 7 January 2023, the total deposit amount of Turkish lira deposit/participation fund to be calculated for real and legal persons The details of the calculation method regarding the decision to establish additional or discounted securities according to their share in the participation fund are given.

The Bank had previously decided to expand it to include the funds obtained from foreign currency repo transactions with domestic resident real persons and the real sector, as well as the transactions made for the purpose of removing foreign currency liabilities subject to security establishment from the balance sheet by making financial derivative transactions with customers providing foreign currency funds.

In the last statement made by the CBRT, it was announced that the said changes regarding the scope of liabilities subject to security establishment will be reflected in the calculation of the share of the Turkish lira deposit/participation fund in the total deposit/participation fund.

According to this;

Real person Turkish lira share = (M1-T1+R1) / (M1+M2+R1+R2) * 100

M1 = Turkish lira deposit/participation fund belonging to real persons

M2 = Foreign currency deposit/participation fund belonging to domestic real persons

T1 = Financial derivative transactions with domestic resident real person customers providing foreign currency funds
Transactions that will result in the removal of foreign currency liabilities subject to the establishment of securities from the balance sheet (customer made in the direction of purchasing foreign currency at maturity)

R1 = Obtained from Turkish lira repo transactions with real persons residing in Turkey
funds

R2 = Obtained from foreign currency repo transactions with real persons residing in Turkey
funds

Legal person Turkish lira share = (M3-T3+R3) / (M3+M4+R3+R4) * 100

M3 = Turkish lira deposit/participation fund belonging to legal entities

M4 = Foreign currency deposit/participation fund belonging to domestic legal entities

T3 = Financial derivative transactions with domestic resident legal entity customers providing foreign currency funds
Transactions that will result in the removal of foreign currency liabilities subject to security establishment from the balance sheet (customer’s purchase of foreign currency at maturity)

R3 = Funds obtained from Turkish lira repo transactions with domestic legal entities

R4 = Obtained from foreign currency repo transactions with domestic legal entities
funds

was determined as.

In the announcement made by the CBRT, the legal person deposit/participation fund, which is listed in the first paragraph of Article 4 of the Communiqué, and “2.A. He noted that the items explained in the “Scope of liabilities subject to securities establishment” section will be excluded and that repo transactions and derivative transactions with the Central Bank, other banks and financial institutions will not be taken into account in the calculations.

In the statement made, the dates on which the applications will be valid are also included, “The changes made in the calculation of the Turkish lira share of real and legal persons will be effective from the calculation date of 27/1/2023 in the application of securities establishment and from the calculation date of 20/1/2023 in the application of commissions from the foreign currency reserve requirements. On the other hand, the changes in question will be taken into account in the Turkish lira deposit/participation fund share notifications as of 13/1/2023.

Source: Bloomberg