By its decision n° 10248 dated June 23, 2022, the Banking Regulation and Control Authority (the “BRSA“) took a measure discouraging derivative transactions of non-financial institutions resident in Turkey with non-residents.
Prior to the new measure, the risk weight applied for the capital adequacy calculation for treasury commercial loans ranged between 20% and 150%, depending on the loan customer’s rating, whether or not the customer made derivative transactions with non-residents . In accordance with ARSB Decision No. 10188 of April 28, 2022, with some exceptions, this ratio, which was applied for the capital adequacy calculation for commercial treasury loans, has been increased to 200% .
This time, in accordance with the new measure, the BRSA decided to apply a risk weight of 500%, regardless of the method used to calculate the amount subject to credit risk, as well as the risk mitigation techniques of credit, credit ratings and real estate. mortgages, for the calculation of the capital adequacy ratio for commercial cash loans in Turkish lira and foreign currency to be made available to residents of non-financial institutions that enter into derivative transactions with non-residents after 23 June 2022.
With the new measure, the cost of funding for Turkish residents who enter into derivatives transactions with non-residents would increase, guiding these borrowers into derivatives transactions with Turkish resident financial institutions.
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