2. Table of Contents
Table of Contents............................................................................................................................................2
1. General Background Information ...........................................................................................................3
1.1. Historical Background .....................................................................................................................3
1.2. TCMB Duty and Authority..............................................................................................................3
1.2.1. The fundamental duties and powers of the Bank......................................................................4
1.2.2. Fundamental powers of the Bank .............................................................................................4
1.2.3. Main advisory duties of the Bank .............................................................................................5
2. TCMB Strategic Plan..............................................................................................................................6
2.1. Vision...............................................................................................................................................6
2.2. Mission.............................................................................................................................................6
2.3. Policies.............................................................................................................................................6
2.4. Strategic Areas and Themes.............................................................................................................6
2.4.1. Public Area Themes..................................................................................................................6
2.4.2. Global Area Themes .................................................................................................................7
2.4.3. Corporate Area Themes............................................................................................................7
3. Swot Analysis of Central Bank of the Republic of Turkey ....................................................................8
4. Income Statement Analysis ....................................................................................................................9
5. Balance Sheet Analysis.........................................................................................................................11
6. Related Ratios.......................................................................................................................................14
7. PROJECT PAPER INTERVIEW EVALUATION FORM .................................................................15
8. Conclusion............................................................................................................................................16
9. References.............................................................................................................................................16
3. 1. GeneralBackgroundInformation
1.1. Historical Background
Central Bank of Turkey is the oldest bank in Turkey which was inherited by the Ottoman Bank
which was established at 1856. At first it only functioned as a discounter for government treasury bonds
and borrower for the Ottoman Empire. After1863 it was re-established as a U.K. and French partnership
and gained the title of being the Ottoman Empire`s Central Bank. With this title it started to press money
in behalf of the government. As being the central bank it also started to conduct the treasury`s tasks such
as collecting the government`s receivables, paying the payables calculating interests for empire`s inner
and outer debts. During this period the main capital source of the central bank was hardly criticized by the
public and eventually at 11 March 1917 a new bank named Osmanlı İtibar-ı Millî Bankasi was established
but due to the World War 1 it could not find the chance of being an international bank which will function
as the central bank of Ottoman Empire.
After the World War 1 a tendency towards establishing an independent monetary policy emerged
and with the political independency which was acquired with Independence War, the government
accelerated its operations and eventually at 3 October 1931 Turkiye Cumhuriyet Merkez Bankasi has
started its operations as an independent company from the Government of Turkey Republic.
Its main building is currently located at Istiklal Street, Istanbul-Turkey and is currently employing 4401
workers around Turkey. It has branches at 21 provinces of Turkey and has offices around the world and
has shares which are publicly traded.
In 11 June 1930, according to law of 1715, Central Bank of the Republic of Turkey has founded
with 15 million liras capital as an incorporation and it started to operations in 3 October 1931.
Authorization of issuances of TL would handled by TCMB and this authorization is extended to 1999 in
1955, and in 1994 it increased forever.
1.2.TCMB Duty and Authority
Article 4- (As amended by Law No. 4651 of April 25, 2001)
The primary objective of the Bank shall be to achieve and maintain price stability. The Bank shall
determine on its own discretion the monetary policy that it shall implement and the monetary policy
instruments that it is going to use in order to achieve and maintain price stability.
The Bank shall, provided that it shall not be in confliction with the objective of achieving and
maintaining price stability, support the growth and employment policies of the Government.
4. 1.2.1. The fundamental duties and powers of the Bank
The fundamental duties of the Bank shall be;
to carry out open market operations,
to take necessary measures in order to protect the domestic and international value of Turkish Lira
and to establish the exchange rate regime in determining the parity of Turkish Lira against gold
and foreign currencies jointly with the Government; to execute spot and forward purchase and sale
of foreign exchange and banknotes, foreign exchange swaps and other derivatives transactions in
order to determine the value of Turkish Lira against foreign currencies,
to determine the procedures and conditions of reserve requirements and liquidity requirement by
taking into consideration the liabilities of banks and other financial institutions to be deemed
appropriate by the Bank,
to conduct rediscount and advance transactions,
to manage the gold and foreign exchange reserves of the country,
to regulate the volume and circulation of Turkish Lira, to establish payment, securities transfer and
settlement systems and to set forth regulations to ensure the uninterrupted operation and oversight
of the existing or future systems, to determine the methods and instruments including electronic
environment for payments
to take precautions for enhancing the stability in the financial system and to take regulatory
measures with respect to money and foreign exchange markets,
to monitor the financial markets,
to determine the terms and types of deposits in banks and the terms of participation funds in
special finance houses
1.2.2. Fundamental powers of the Bank
The privilege of issuing banknotes in Turkey shall rest exclusively with the Bank.
The Bank shall determine the inflation target together with the Government and shall in
compliance with the said target adopt the monetary policy. The Bank shall be the ultimate body
authorized and responsible to implement the monetary policy.
The Bank shall, with the objective to achieve and maintain price stability, be authorized to utilize
monetary policy instruments described in this Law and shall also be authorized to directly
determine and implement other monetary policy instruments that it deems appropriate.
The Bank shall, under extraordinary conditions and in cases when the resources of the Fund are
5. insufficient, be authorized to grant advance to the Savings Deposits Insurance Fund in accordance
with the procedures and conditions that it shall determine.
The Bank shall, as the lender of last resort, carry out the operations of extending credits to banks,
The Bank shall, in accordance with the procedures and conditions that it shall determine, be
authorized to request from banks, the interest rates to be charged in credit operations and deposit –
taking.
The Bank shall, in order to monitor financial markets, be authorized to request necessary
information and to gather statistical information from banks, other financial institutions and from
establishments and institutions authorized to regulate and supervise the said institutions.
1.2.3. Main advisory duties of the Bank
The Bank shall be the financial and economic advisor, the fiscal agent and the treasurer of the
Government. The relation of the Bank with the Government shall be maintained through the Prime
Minister.
The Bank shall present its views to the Government, on the issues to be requested with respect to
financial system.
The Bank may convey its opinions and observations regarding banks and other financial
institutions that it shall deem appropriate to the Prime Ministry and to institutions authorized to
regulate and supervise the said establishments and institutions.
The Bank shall be authorized and empowered to set forth and implement regulations pertaining to
the duties and powers entrusted to it by this Law and legislation, and shall be authorized and
empowered to supervise the compliance with these regulations and the accuracy of the information
submitted at these establishments and institutions subject to the said regulations.
The Bank shall enjoy absolute autonomy in exercising the powers and carrying out the duties
granted by this Law under its own responsibility.
The Bank shall participate to the bankrupt’s estate as a privileged creditor for the amount of its
claims and the interest pertaining to them, in the event of bankruptcy of the bank, person or
institution with whom the Bank undergoes a transaction during the course of implementing
monetary policy instruments. Actions for damages caused by the personnel of the Bank during the
performance of their duties shall only be filed against the Bank.
The right of recourse of the Bank shall be reserved.
6. 2. TCMB Strategic Plan
2.1.Vision
Independence, powerful organization structure and qualified employees, technological advance and
efficient decision making abilities Central Bank of the Republic of Turkey would be leading Central Bank
in the world.
2.2.Mission
Money market, credit and capital market in the first instance; TCMB provides price stability and
regulations for financial stability, manage FX and Gold reserves of the country, issues banknotes, provide
banknote safety in velocity, set up payment systems and manage them, as a liable for transparent
corporate provide value added to its employees, stakeholders and society.
2.3.Policies
1. Independency
2. Transparency and accountability
3. Credibility
4. Public Welfare
5. Effectuality and effectiveness
2.4.Strategic Areas and Themes
In the bank’s strategic plan, the duties given by law and corporate internal support systems collected in 3
strategic areas. These are named as public, global and corporate also they divided into sub titles in it.
2.4.1. Public Area Themes
1. Price stability
2. Financial stability
3. Payment systems
4. Reserve management
5. Fiscal agency, consultant and treasurer for government
6. Emission policy
7. Banks and financial institutions audit
8. Providing statistical data and publish
9. Contact, transparency and accountability
7. 2.4.2. Global Area Themes
1. Role in the central banks’ network
2. Effectiveness and determinativeness in international platforms
3. Effectiveness in near hood of country
4. Role in entrance of European Union
5. Conformity to international norms
6. Liabilities from international agreements
2.4.3. Corporate Area Themes
1. Leadership, governance and strategic planning
2. Quality management system
3. Organization structure
4. Human Resources and education processes
5. Technologic infrastructure and informatics systems
6. Corporate internal communication
7. Construction, logistics and external support services
8. Public relation, demonstrations and activities on external areas of the bank
9. Internal Control System
10. Audit
11. Legal structure
12. Information and documentary management
13. Corporate continuity and security
14. Accounting and budgeting
15. Services in branches
8. 3. SwotAnalysis of Central Bank of the Republic of Turkey
Strenghts
- EFT
- Technology compliance
- Strategic location for
supreme courts and other
decision making mechanisms
- Strong banking sector in the
country
Weaknesses
-Cumbersome structure
- Employee saturninity
- Veteran employees
opposition to change
Opportunities
-New systemto determining
liquidity by using reserve
requirements
- Benefit from strong political
authority
- Stand clear of 2009 financial
crisis
Threats
- In strategic alteration, thus
uncertainity obstruct
decision making process.
-By using overnight rates,
The Central Bank sets the
liquidity level this also
causes an uncertainity in the
economy
14. 6. RelatedRatios
I. Earnings and Efficiency Profitability Ratios As of2011:
1 Return on Asset (ROA)
Net Income / Total Average Assets 0,032524823
3 Income Expense Ratio
Total Income / Total Expense 4,436530163
4 Avarage Return of Interest Earning Assets
Total Interest Income / Total Average Interest Earning Assets 1,366142017
5 Avarage Cost of Funds
Total Interest Expense / Total Average Interest Bearing Liablities 0,020316223
6 Ratio of Non Interest Income to Non Interest Expense
Non Interest Income / Non Interest Expense 4,007759857
7 Break-Even Ratio
(Total Expenses - Non Interest Income) / Total Average Interest
Earning Assets -1,589394948
8 Ratio of Net Interest Income to Avarage Total Assets
Net Interest Income / Total Average Assets 0,087170836
9 Ratio of Total Operating Expenses to Total Income
(Total Operating Expense / Total Operating Income) 0,249515948
10 Ratio of Interest Expense to Interest Income
Interest Expense / Interest Income 0,233062151
11 Percantage of Non-Interest Income in Total Income
(Non-Interest Income / Total Income) 0,650444165
12 Operating Expenses required to Manage Assets
(Operating Expense / Total Average Assets) 0,007281597
13 Interest Profitability of Interest Earning Assets
Net Interest Income / Average Total Interest Earning Assets 0,081942261
15 Efficiency Ratios
Non Interest Expense /( Interest Income - Interest Expense + Non
Interest Income) 0,650444165
III.
Liquidity
Ratios
27 Deposit to Loan Ratio 92,39
Total Loans / Total Deposits
29 Ratio of Foreign Currency Assets to Foreign Currency Liabilities
Foreign Currency Assets / Foreign Currency Liabilities 106772,0958
Ratio of Interest Earning Assets to Total Assets
33 Interest Earning Assets / Total Assets
Ratio of Contingent Liabilites and Commitments 0,011592078
Total Contingent Liabilites and Commitments / Total Assets
Percentage of Non-Performing Loans in Total Loans 0,011479924
40 Loan Concentration Risk Ratio
Total Big Loans / Total Loans 0,001027593
15. 7. PROJECTPAPER INTERVIEWEVALUATION FORM
NAME OF BANK: TCMB NAME OF STUDENT: Emre Günbeyi & Ahmet Balcı
I. To be completed by student:
1. How effective was your interview?
5
ٱ
Excellent
2. How do you rate the quality of the answers given to your questions?
5
ٱ
Excellent
3. If this bank offered you a job, would you want this bank personnel to be your manager?
5
ٱ
Definitely
II. To be completed by bank manager:
1. How effective was your interview?
5
ٱ
Excellent
2. How do you rate the quality of the questions asked to you?
5
ٱ
Excellent
3. If this individual applied to you for a job in your bank, would you want to work with him/her?
5
ٱ
Definitely
DATE: 26.02.2012
NAME OF BANK MANAGER: Central Bank Of Republic Of Turkey Market General
Directorate, Fx Market Manager, Bulent Usta
Note:
All elements used in this paper are from student works and critiques about the bank can not be associated
with Mr. Usta
16. 8. Conclusion
With the help of the technology compliance, benefiting from strong banking sector in the country
and high credibility of the government TCMB has opportunity to increase its value and show its potential
in practice. Despite using new implementations causes a uncertainty for the banks’ decision making
process, TCMB has a great credibility from the side of supreme authority and the whole economy.
However, cumbersome structure can be covered as weakness in the way of its significant
implementations.
TCMB is a non-profit organization which gives services to whole economy, but though it has
increased its net income by %122 between the years 2010-2011, and for this reason its profits rose by
%564. Also as of 2011 it has increased its total assets by %55 percent, for this reason it has a ROE of %3
and income expense ratio of 4.43 as mentioned above. Also it has a low cost of funding (%2) which makes
it more profitable
Besides of its financial position, it has increased its reserves by %135, which makes it a very
strong bank against a market risk.
9. References
TCMB Operation Report
http://www.tcmb.gov.tr/ Access Date: 01/05/12
History of TCMB
http://www.tcmb.gov.tr/yeni/banka/tarihce.html Access Date: 30/04/12
Balance Sheet of TCMB
http://evds.tcmb.gov.tr/yeni/cbt-uk.html Access Date: 24/02/12
Income Statement of TCMB
http://www.tcmb.gov.tr/yeni/mgm/denetim2011/2011audit.pdf Access Date: 24/02/12
