The Communiqué on Risk Management Disclosure By Banks was published in Official Gazette number 29511 on 23 October 2015 ("Communiqué"), coming in force on 31 March 2016. The Communiqué outlines procedures and principles of consolidated and unconsolidated risk management disclosure to be made by banks. It also includes obligatory tables and templates in this regard. It represents a more compatible regulatory structure with the Basel standards than previously existed in Turkey.
The Basel Committee on Banking Supervision ("Basel Committee") frames general bank supervision and regulation worldwide. The Communiqué introduces amendments to align Turkish regulation with the standardized approach introduced in 2012 by the Basel Committee's Regulatory Consistency Assessment Programme, particularly the Third Basel Accord (Basel III). Basel III was issued to prevent insufficiency of liquidity caused by risky loans. Member states are expected to harmonize domestic law with Basel III provisions by 31 March 2019.
According to the Communique, any information regarding risk management must be included in financial reports as a separate section. Disclosures must be easily accessible and must enable measurement and assessment of information given by banks. Furthermore, banks must keep an online disclosure database, showing five years' worth of records. The online database must be available on a bank's website from 31 March 2016 onward.
The Communiqué also includes format and frequency of report tables and report templates for disclosures (Attachment No: 1). These disclosure reports are subject to internal auditing and examination as financial reports.
Banks can refuse to share information if risk management disclosures contain information that could be regarded as business secrets. In these circumstances, banks should state in an additional part of the disclosure report that they have not disclosed the relevant information and the reasons for this non-disclosure.
The Communiqué outlines principles for transparent and good quality risk management disclosures. Accordingly, disclosures must be:
- In due course and consistent.
- Comparable with other banks.
- Comprehensible and accessible. Important information should be highlighted and complex subjects must be explained in plain language.
If risk exposure is insignificant or tables and templates are incomprehensible, banks may choose to not to reveal such information, provided they explain this in the additional information part of the disclosure report.
Disclosures made within the scope of the Communique are subject to independent audit.
Please see this link for the full text of the Communiqué (only available in Turkish).
Information first published in the MA | Gazette, a fortnightly legal update newsletter produced by Moroğlu Arseven.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.