The New Banks Act

by Piraye Kuranel

In the IMF letter of intent dated 26 April 2005, the Turkish Government undertook to introduce a new banking law that further improves the supervisory and regulatory framework of the sector. The Parliament first approved the new banks act on 2 July 2005. Although President Sezer previously exercised his veto right against three provisions of the new act, the Parliament passed it on 20 October 2005 without any amendments at all.

The Banks Act No. 5411 (“Law No. 5411”)introduces major novalties for the Turkish banking system. Nevertheless, many of these novalties were long discussed during the drafting stage of Law No. 5411, including in the working papers of the Banking Regulation and Supervision Agency (“BRSA”) in previous years, and therefore, were expected and well known by the market. The novelties of Law No. 5411 can be summarized as follows.