The Official Gazettes of 2 and 4 March 2017 (No. 29995 and 29997, respectively) have introduced amendments to a regulation and a communiqué, both of which have been previously published by the Banking Regulation and Supervision Agency ("Agency"). Both amendments have entered into force on the date of their publication. Below is information we deem significant with regard to the content of these amendments.
I. The Amending Regulation on the Regulation Regarding Banks' Obtainment of Support Services
The Agency has published the Amending Regulation on the Regulation Regarding Banks' Obtainment of Support Services ("Amending Regulation") on the Official Gazette No. 29997, dated 4 March 2017. The Amending Regulation contains three amendments made to the original regulation.
The first amendment is to the fourth paragraph of Article 4 of the original regulation. While Article 4 sets forth the limitations to the banks' obtainment of support services, subparagraph 4 thereof stipulates that they could obtain support services, such as security services and services regarding the collection, counting, distribution and delivery of any kind of cash, security and similar valuable goods, from companies that fall within scope of the Law No. 5188 on Private Security Services. That part of the subparagraph remains the same. The amendment concerns the addition of the last sentence, which states, in summary, that the services including the collection, counting, distribution and delivery of securities, could also be provided by service providers that are authorized by the Information Technologies and Communications Authority.
The second amendment is to the seventh subparagraph of the same article (i.e., Article 4 of the original regulation). The relevant subparagraph is regarding the marketing of products and services for which banks could obtain marketing services from support services providers. The amendment widens the scope of such products and services, and includes among them: (i) the products and services that are deemed as retail receivables as per the applicable legislation, (i.e., Article 6(1) (g) of the Regulation on the Assessment and Evaluation of Banks' Capital Adequacy), and (ii) products and services regarding the purchase and sale of any kind of real estate and vehicles.
Lastly, the Amending Regulation eases certain qualifications that it requires with respect to service providers, as per Article 6 of the original regulation. With the Amending Regulation, entering into force as of 4 March 2017, the original regulation will no longer seek such service providers to be equity companies, if the services they offer to the banks can be classified as services related to marketing, the collection of data and information, the provision of execution of agreements and the delivery of such agreements to the banks.
II. Amending Communiqué on the Communiqué Regarding Tools for the Reduction of Credit Risk
The Agency has published the Amending Communiqué on the Communiqué Regarding Tools for the Reduction of Credit Risk ("Amending Communiqué") on the Official Gazette No. 29995, dated 2 March 2017. The Amending Communiqué contains only one amendment, which amends Article 20(7) of the original communiqué. Said Article 20 stipulates the minimum conditions for the eligibility of financial collateral.
For deposits and cash equivalents to be deemed eligible as financial collateral, the original version (prior to the amendment) sought that the following be explicitly stipulated: (i) the term of pledge or assignment, and (ii) the credit for which such deposits and cash equivalents were pledged or assigned in exchange. The original version further specified that such collateral could not be left to the free use of the debtor during the term of the credit. The amending communiqué is wider in scope. Firstly, it adds the following to the matters that must be explicitly addressed in the agreement: The risk amounts in exchange for which such collateral was deemed eligible, and the date of the calculations, which were taken into account when financial collateral were used in the credit risk reduction calculations, should also be recorded. Additionally, all such information should be kept ready for inspection. Lastly, the Amending Communiqué also sets forth a condition for cross-collateralization and the rules regarding when collateral could be let free or reused for the purposes of credit risk reduction.
This article was first published in Legal Insights Quarterly by ELIG, Attorneys-at-Law in June 2017. A link to the full Legal Insight Quarterly may be found here
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