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Legal Alerts
11/09/2021 https://www.esin.av.tr/wp-content/themes/esin/images/esin.jpg

Turkish Banks Able to Acquire Shares More Easily

Legal Alerts
Banking & Finance
General

Recent Development

The Banking Regulation and Supervision Agency (“BRSA“) has amended the Regulation on Bank Transactions Subject to Authorization and Indirect Shareholding (“Regulation”) with the regulation published in the Official Gazette No. 30509 on August 14, 2018 and entered in the force on the same date (“Amendment“).

The BRSA joined the Capital Markets Board (“CMB“) in facilitating banks’ acquisitions of company shares by expanding the BRSA approval exemptions. In June, the CMB had introduced exemptions to the tender offer obligations for banks’ acquisitions of public company shares.

What’s New?

  • According to Article 8, Clause 7 of the Regulation, BRSA approval is required for banks to establish new companies or acquire shares of existing companies.
  • Prior to the Amendment, the BRSA approval was not required in cases of share investments for trading purposes; the acquisition of shares for the collection of receivables; and capital commitments to subsidiaries.
  • With the Amendment, (i) acquisition of shares of companies established pursuant to a law or presidential decree where benefiting from the companies’ services is subject to ownership of shares and (ii) acquisition of shares of companies established by more than one bank or financial institution in the context of risk management is not subject to the BRSA approval if:
    • the acquisition does not result in the bank’s sole or joint control of the target;
    • the bank’s total share in the target does not exceed three per thousand of its equity capital; and
    • a notification is made to the BRSA at least thirty days prior to the acquisition, along with a report explaining the target’s activities in detail.

Conclusion

The Aamendment extended the exemptions to the BRSA approval requirement, further facilitating bank acquisitions of the shares of their defaulted borrowers.