New Steps Towards Normalization: Asset Ratio Rule, Easier To Comply With

Recent Developments
The Banking Regulatory and Supervisory Authority ("BRSA") change the formula of the asset ratio ("AR") formula with its decision dated October 26, 2020 and No. 9238.

What's New?

The BRSA initially defined the AR formula as:

AR = [Loans + (Securities x 0.75) + (Central Bank Swaps x 0.5)] / [TRY Deposit + (FX Deposit x 1.75)]

The "Loans" item in the AR formula was defined as "the total amount of loans extended by banks to retail and commercial clients, excluding non-performing loans." The BRSA further clarified the scope of this item with its decision dated April 30, 2020.

With its latest decision dated October 26, 2020, the BRSA decided that foreign currency loans extended by resident banks to resident banks with a maturity of more than one year and syndicated loan facilities extended by resident banks to resident banks be included in the "Loans" item of the AR formula as of November 1, 2020, with a coefficient of 1.00.