The Bank’s risk policies and implementation guidelines are formulated in accord with the provisions of Article 36 of the “Regulation concerning Banks’ Internal Systems” published in the Official Gazette issue 26333, dated 01 November 2006.
The objective of risk policies is to make sure that Halkbank conducts its activities in the frame of the procedures and principles as set forth in the Banking Law and in line with its mission, goals, profitability and productivity principles, and to ensure utmost observation of the interests of depositors and the Bank’s shareholders.
Under the “Risk Management Policies and Implementation Procedures”, the Board of Directors has determined the Bank’s risk appetite to determine the maximum amount of risk that the Bank may take.
Risk management policies adhered to at Halkbank are presented below on the basis of credit, market and operational risk components.
In the frame of lending policies, limits are created in relation to lending, concentration and sectors for loans to be extended under the authority of the headquarters, regions and branches; the said limits are reviewed periodically.
Risks that will arise from new products and services to be introduced are analyzed employing scenario analyses and stress tests.
Collateralization procedures are devised according to rating groups for Entrepreneur Loans.
Rating processes are subjected to validation at certain intervals.
The adequacy of the Bank’s capital to cover potential risks is monitored and expected/unexpected losses are calculated for banking risks.
Repayment performances and creditworthiness of the companies in the lending portfolio are closely monitored making use of early warning signals.
Periodic scenario analyses and stress tests are prepared and their results are reported so as to evaluate the impact of unexpected market conditions on core business lines with a view to measuring the possible effects of the Basel II/
Limits are applied for transactions that may be carried out in capital markets and foreign currency markets, including the stop-loss limits for capital markets position losses and for FX position losses in treasury transactions
Limits were developed for the Bank’s open position. In addition, limits are applied to restrict the counterparty risk in transactions to be performed with correspondent banks.
Limits are created on the Bank’s liquidity and structural interest rate risk, which are constantly controlled.
Loss that might result from the portfolio held-for-trading and FX position is measured employing the internal models and standard method for market risk. For VaR projections based on internal model, historical simulations are performed, thus also testing the success of the model.
The impact that interest rate shocks have on the Bank’s economic value and profitability is also analyzed and kept under control with the limits defined.
Stress tests and scenario analyses are employed to measure the Bank’s resilience against negative market conditions.
The ratio of core deposits is established by determining the withdrawal ratios of time deposits opened with the Bank.
Risk level analyses are conducted which are formed in view of the frequency and loss amounts of the Bank’s operational losses on the basis of occurrences and lines of business, in the light of the data entered into the operational risk loss data base.
Precautions that will prevent the occurrence of operational losses are established by taking into consideration the data entered into the operational risk loss data base.
Necessary action is taken to prevent the occurrence of any loss that may be outside the tolerable limits in relation to possible losses that may occur against operational risks.
