The impressive growth of the Turkish economy during the course
of the last decade has its parallel in the country's banking
sector. As of June 2013 Turkey has a diversified banking base with
49 different banks operating in the country employing around
208.000 people with 11.445 branches all over Turkey. The annual
rate of branching in the sector is 6.8% and the growth of
employment in the Turkish banking sector is 5.3%. The private banks
are leading the sector with 45.7% of the overall branches, public
banks own 27.8% of the overall branches in Turkey and the banks
with foreign capital currently own 18.3% of the total branches in
the Turkish banking industry. 44.6% of the workforce employed in
the Turkish banking sector works for the private banks, 25.3% in
public banks and 19.7% works in banks with foreign capital.
The Size of the Turkish Banking Sector
Total assets of the Turkish banking sector grew by 11.5% during
the first six months of the year 2013 and reached 1.528 billion
dollars. Despite the fluctuations in the global and the Turkish
economy, the banking sector grew by 4.2% during the first quarter
of the 2013 and by 7% during the second quarter of the same year.
The total credits issued by the banks operating in Turkey grew by
4.9% in the first quarter of 2013 and by 10.5% during the second
quarter of the year 2013. In real terms the credits issued by the
Turkish banking sector grew by 126.4 billion Turkish liras since
the end of 2012 and reached 921.2 billion Turkish liras as of June
2013. The total volume of securities hold by the Turkish banking
sector stands around 274 billion Turkish liras as of June 2013 and
the level of deposits reached 62.4% amounting 837.7 billon Turkish
liras. As of June 2013 the net profit of the Turkish banking sector
grew by 19.7% compared to the same period of the previous year and
reached 13.859 billion Turkish liras. As the numbers demonstrate
the Turkish banking sector has a healthy and a stable outlook and
the regulatory framework that the Turkish banking sector is
subjected to plays a prominent part in this success.
Regulatory Framework: Basel ll and Basel lll
After the 2008 global economic meltdown and the financial risks
that have emerged afterwards, the Basel II has started to be
increasingly perceived as inadequate to deal with such situations
of financial collapse and the Basel III has come in to the fore in
order to buttress the previous Basel II regulation. The most
critical addition that the Basel III regulation has introduced was
the new understanding that deals with the capital adequacy of the
banks. However in that regard the past experiences of Turkey with
extreme economic fluctuations have proved very useful.
After the 2001 economic crisis in Turkey, a new regulation was
adopted which reorganized the Turkish banking system along more
stable lines. Reorganization has disciplined the Turkish banking
system to an extend that the Turkish banking industry has emerged
as the sole banking industry among the OECD countries that did not
require public financial support after the 2008 global economic
crisis. Moreover, by the regulations following the 2001 economic
crisis in Turkey, the Turkish banking sector has managed to
establish better internal auditing and controlling mechanisms and
attained high levels of liquidity as well as low levels of leverage
ratio accompanied by high levels of deposits. Given the
transformation the Turkish banking industry has gone through, the
compliance of Turkey with Basel III regulation is expected to be
In that regard the Capital Adequacy Regulation in Turkey has
already been made compliant with the requirements of Basel II in
2007 and the Basel II itself has been adopted in July 2012. As of
March 2013 the Capital Adequacy Ratio of the banks operating in the
Turkish market is 17.4% which is above the minimum level required
by Basel III. The implementation of Basel II has already started
and the deadline for the report period of Basel III leverage ratio
has been set as January 2014. The Basel III is expected to further
strengthen the macroeconomic stability in Turkey, contributing to
the transparency of the country's banking sector and clamp down
the grey economy.
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