IADI Annual Conference on Applying Core Principles in Turkey
Gain insights into the evaluation of Turkey's Savings Deposit Insurance Fund (SDIF) compliance with IADI Core Principles at the 13th IADI Annual Conference. Discover key findings, assessment results, benefits, and improvement areas discussed during the event.
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13th IADI ANNUAL CONFERENCE Applying the Core Principles TURKEY Case Ayla KUCUKOGLU KELES SAVINGS DEPOSIT INSURANCE FUND (SDIF) - TURKEY Port of Spain, Trinidad and Tobago October 23, 2014
Background of Assessment C Complaint Self-assessment of compliance with the CP s in 2011. LC Largely Compliant MNC Materially Non-Compliant Workshop on Assessment of Compliance with the CP s on 6-10 May 2013 in Turkey NC Non-Complaint NA Not Applicable This assessment; explicitly showed that deposit insurance framework and design features of the SDIF in Turkey broadly conforms to IADI Core Principles. emphasized the role and significance of SDIF as a Deposit Insurer and Resolution authority in Turkish FSN, determined current DIS in Turkey a list of recommended actions for the improvement of 3 Savings Deposit Insurance Fund (SDIF) Turkey, October 23, 2014
Benefits Better understanding the IADI CPs Recognizing the level of compliance to the principles more realisticly Determining the improvement areas in existing DIS Explaining the requirements of DIS to other FSN players more effectively Being prepared for other evaluations such as FSAP, FSB peer reviews SDIF Gaining useful knowledge about How to apply IADI CPs in their own organization Helping them in conducting self-assessment of compliance successfully Understanding benefits-challenges of a Loss Minimizer DIS much better Participants Evaluating a typical Loss Minimizer (SDIF) Collecting valuable feedbacks about the assessment studies Reviewing the overall assessment process and pinpoint the potential improvement areas in the methodology IADI 4 Savings Deposit Insurance Fund (SDIF) Turkey, October 23, 2014
Assessment Results Deposit insurance framework in Turkey broadly conforms to best international practice. (Turkey Financial System Stability Assessment Report, November 2011) C 10 LC 4 MNC 4 5 Savings Deposit Insurance Fund (SDIF) Turkey, October 23, 2014
Key Findings Recovery process (22 billion USD) Legal Protection Dealing with parties at fault in a bank failure Significant Reserve Fund (8 billion USD) Effective Risk-based Premium System Financial Safety Net Public Policy Objectives, Mandate, Powers, Governance, Membership Early detection and timely intervention Resolution Process Cross border issues Improvement Areas Strong Areas Any relation with loss minimizer mandate? 6 Savings Deposit Insurance Fund (SDIF) Turkey, October 23, 2014
Mandates of SDIF Risk - Minimizer Loss - Minimizer Pay-box Reimbursing insured depositors Calculating and raising premiums Risk assessment Imposing differential (risk-adjusted) premiums Risk monitoring Role in handling bank failures Off-site examinations On-site inspection Intervention in the affairs of its member banks SDIF Powers Interaction during life cycle of bank Inter-Relationship Issues : Mainly reactive, some proactive features : Approaching failure : Requires well-defined roles, responsibilities, information sharing 7 Savings Deposit Insurance Fund (SDIF) Turkey, October 23, 2014
Mandates of BRSA versus SDIF Banking Regulation and Supervision Agency (BRSA ) Savings Deposit Insurance Fund (SDIF) To regulate, enforce and ensure the sound implementation of banking practices via: Prudential regulation Risk focused supervision Initiate resolution process To insure deposits by applying A risk based, ex ante premium system To resolve banks by pursuing Strategic resolution plans The cost efficiency method To execute the follow-up and collection transactions Information Sharing Coordination&Cooperation MOU Share database and information Have regular meetings Standing Committees 8
Key Recommended Actions Require the supervisor to involve SDIF earlier in the problem bank resolutionprocess Access necessary deposit data onsite and establish Single Customer View Shorten the payout process to fulfill public policy objectives Conduct periodic simulation exercises for bank closures Engage foreign supervisors to clarify the legal status of foreign branches operating in Turkey and their treatment during a potential failure Set up formal agreements covering back-up funding arrangements 9 Savings Deposit Insurance Fund (SDIF) Turkey, October 23, 2014
New Approach for Resolution Intervention Date BRSA informs SDIF about corrective actions BRSA SDIF Current Regime Standard Supervision Intensive Supervision P&A, Merger, Liquidation SDIF BRSA P&A Merger Bridge Bank(*) Winding up Approach New Bail-in, TLAC (*) (*) Not exist in current regulation 10 Savings Deposit Insurance Fund (SDIF) Turkey, October 23, 2014
What has been done, so far ! SDIF Management (including Fund Board) deeply analyzed all findings and recommended corrective actions of the assessment team. Assessment results were put on the agenda of the Coordination Committee and Financial Stability Committee to discuss with all relevant FSN players. SDIF drafted the Banking Law amendment and forwarded it to the Government. In order to implement key corrective actions, SDIF started necessary projects on its side such as Insured Deposits Monitoring System (Single Customer View) 11 Savings Deposit Insurance Fund (SDIF) Turkey, October 23, 2014
Challenges Necessity of having very well-defined coordination & cooperation and information sharing platform with supervisory authority to perform Loss Minimizer mandate with compliant to the CPs Implementation of the recommended corrective actions for other FSN Players Need for repeating the assessment study with regard to the Revised IADI CPs Requirements for significant amendments in definition of resolution process, roles & responsibilities of SDIF & BRSA refer to the new internationalstandards 12 Savings Deposit Insurance Fund (SDIF) Turkey, October 23, 2014
Complaint to All CPs? https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcTTn0OxcnJU_2fJKDfIUfHPedg2JCCWgI3XXM2aiKnDpzFB-lsR 13 Savings Deposit Insurance Fund (SDIF) Turkey, October 23, 2014
Why Not? https://encrypted-tbn1.gstatic.com/images?q=tbn:ANd9GcQSKoH-8cKU_p7vp8phbEmEBovTDyKOOFRleTQOlnikGA0f5a0v-g 14 Savings Deposit Insurance Fund (SDIF) Turkey, October 23, 2014
Thank You..! 15
