The Turkish Banking Regulatory and Supervisory Authority (the “BRSA”) has recently amended the Regulation on Financial Holding Companies (the “Financial Holding Regulation”). The amendments were published in the Official Gazette No. 30088 on June 6, 2017, and will be effective as of January 1, 2017.
What the regulation changes
The Financial Holding Regulation defines financial holding companies as parent companies of at least one credit institution. A financial holding company must meet four specific criteria as set out under Article 4 of the Financial Holding Regulation to be considered a financial holding company.
Previously, one of these criterion was that the ratio of the average of the total assets of the parent company’s subsidiaries composed of financial leasing, factoring and financing companies and banks to the average of the total assets of the parent company’s credit and financial institutions subsidiaries shall be at least 10% in the last three accounting periods.
With the respective amendment, above mentioned criterion has been changed. Accordingly, the new condition to be fulfilled for a financial holding company is that the ratio of the average of the total assets of any of the credit institution subsidiaries of the parent, to the average of the total assets of all credit and financial institution subsidiaries shall not exceed 95% in the last three accounting periods.
The amendment seeks to renovate regulations in line with the ever-evolving structures of financial holding companies and to comply with European Union regulations in addition to prevent possible problems in practice.