New credit limit decision for banks from the BRSA

The Banking Regulation and Supervision Agency (BRSA) has made a notable decision, introducing new limitations on credit utilization by development and investment banks. With this regulation, the loans these banks can extend to an individual or a group have been limited in connection with their core capital.

In a statement issued by the BRSA, it was noted, "The Banking Regulation and Supervision Agency, taking into account the investment credit-granting function of development and investment banks, has determined credit limits by linking them to the banks' leverage ratios in order to contribute to the management of credit risk concentrations."

GRADUAL TRANSITION PROCESS TO BE GRANTED

The statement further added, "Within the scope of the Regulation on the Measurement and Evaluation of the Leverage Level of Banks, stricter credit limits will be applied for banks operating with a lower leverage ratio." It was also emphasized that a gradual transition process would be granted to banks to ensure compliance with the new ratios.

The following information was provided in the statement from the BRSA regarding the matter:

"Based on the first paragraph of Article 43, as well as Articles 77 and 93 of the Banking Law No. 5411, and Article 17 of the Regulation on the Determination of Risk Groups and Credit Limits (Regulation) published in the Official Gazette dated 21/12/2023 and numbered 32406;

1) Excluding Istanbul Takas ve Saklama Bankası A.Ş. and İller Bankası A.Ş., for development and investment banks on a consolidated and non-consolidated basis; the ratio of the total risk amount of loans that can be extended to a real or legal person or risk groups to their core capital amounts shall not exceed the ratio corresponding to the leverage ratio level in the table below,

2) For development and investment banks established after 01/01/2020 and having a leverage ratio of ten percent or more calculated on a non-consolidated basis for month-ends, the credit limit ratios in the first article shall be applied as reduced by five points for five years from the date they receive their operating license,

3) Regarding the limits specified above, the provisions of the Regulation concerning the determination of risk groups, calculation of risk amounts, transactions not subject to credit limits, reporting of credit limits, non-compliance with limits, and the elimination of excesses shall be applied,

4) In the event of an excess in limits due to reasons other than the fourth paragraph of Article 16 of the Regulation and not at the bank's discretion, such excess amounts shall be eliminated within the period to be determined by the Agency, and no administrative fine shall be imposed on the bank for the excess during this period,

5) Excluding loans extended to risk groups to which the banks belong, project or investment loans with a maturity of longer than three years and partnership shares acquired for the purpose of providing financing shall not be subject to credit limitations within the scope of this Decision,

6) In the event of an excess regarding the limits in Article 1 as of the date of this Decision, these excess amounts shall be eliminated as follows: ten percent by 31/12/2025, thirty percent by 31/12/2026, sixty percent by 31/12/2027, and one hundred percent by 31/12/2028; in the event of an excess regarding the limits in Article 2, these excesses shall be eliminated within one year,

7) The Presidency Office shall be authorized regarding the extension of the aforementioned periods and the modification of exemptions,

8) It has been decided that this Decision shall be announced to the Founding Unions and published on the Agency's website"