new turkish lira compliance activities in banking sector

1 TRY WorkTRY Workggrouproup

NEW TURKISH LIRA NEW TURKISH LIRA Compliance ActivitiesCompliance Activities

in in Banking Sector Banking Sector

Leman TürkoğluLeman Türkoğlu

The Banks Association of Turkey The Banks Association of Turkey

TRY(YTL) WorkTRY(YTL) Workggroup roup LeaderLeader


Overview of Overview of Regulations effecting the BanksRegulations effecting the Banks

EEffects on Products / Servicesffects on Products / Services

Project ApproachProject Approach

Activities performed by TRY WorkgroupActivities performed by TRY Workgroup

Critical Success Factors Critical Success Factors

AgendaAgenda


New monetary unitNew monetary unit TRY TRY • 1.000.000 TL = 1 TRY1.000.000 TL = 1 TRY

• 2 digits after the comma will be New Kuruş2 digits after the comma will be New Kuruş

• 10.000 TL = 1 New Kuruş10.000 TL = 1 New Kuruş

Current banknotes and coins will be in circulation till 2006Current banknotes and coins will be in circulation till 2006

Accounting Accounting

• Records for 2004 and before will be kept as they areRecords for 2004 and before will be kept as they are since they since they provide a provide a basis for balance sheet and financial information basis for balance sheet and financial information

• Starting from 2005, all transactions requiring accounting will Starting from 2005, all transactions requiring accounting will be kept in TRYbe kept in TRY

Labeling, Rates and Price Lists Labeling, Rates and Price Lists

• Without effecting the rates, prices and commissions will be Without effecting the rates, prices and commissions will be published published inin bothboth units units (TRL and TRY) (TRL and TRY)



Legal Legal AspectsAspectsDocuments dated before 1.1.2005 Documents dated before 1.1.2005 will not be required to be will not be required to be rrenewedenewed

Credit AgreementsCredit Agreements Payment PlansPayment PlansSecurity LettersSecurity Letters/Collaterals/Collaterals Insurance Policies Insurance Policies

Units requiring sensitivity Units requiring sensitivity will operate in line with will operate in line with regulations set by regulations set by authoritiesauthoritiesForeign Exchange Foreign Exchange Investment Funds Investment Funds StocksStocksTreasury BondsTreasury Bonds Government BondsGovernment Bonds

RoRounding Rule unding Rule : : 5.000 TL and over will be accepted as 1 New 5.000 TL and over will be accepted as 1 New Kuruş, Kuruş, amounts amounts below 5.000 TL will be accepted as “zero” below 5.000 TL will be accepted as “zero” 123.625.000 TL = 123,63 TRY123.625.000 TL = 123,63 TRY 123.625.128 TL = 123,63 123.625.128 TL = 123,63 TRYTRY123.624.998 TL = 123,62 TRY123.624.998 TL = 123,62 TRY








AgendaAgenda


Accounts Accounts

• BalancesBalances of all TL accounts and their of all TL accounts and their limitslimits, if any, , if any, will be will be converted to TRYconverted to TRY based on the conversion rate in the law. based on the conversion rate in the law.

• Account No.s and account booksAccount No.s and account books can be changed or kept can be changed or kept same depending on bank’s systemsame depending on bank’s system

• Interest accrualsInterest accruals as of the end of 2004 will be realized as TL as of the end of 2004 will be realized as TL

• Following January 1Following January 1stst, 2005, , 2005, amounts visible on all slips will amounts visible on all slips will be TRYbe TRY, no further change is expect, no further change is expecteded for the amount. for the amount.



DepositDepositss / / WithdWithdrawrawalsals

• TL and YTL will be deposited TL and YTL will be deposited to to and and withwithdrawndrawn from ATMs during year from ATMs during year 2005 and transactions will be 2005 and transactions will be recorded as YTL. recorded as YTL.

Collection / payment instructions performed via banksCollection / payment instructions performed via banks

• Instructions pertaining to year 2005Instructions pertaining to year 2005 given prior to given prior to 1.1.2005 1.1.2005 (water, electricity, natural gas, telephone etc. invoice collections, (water, electricity, natural gas, telephone etc. invoice collections, automatic payment / collection products, tax / SSK automatic payment / collection products, tax / SSK insurance insurance payments etc.) payments etc.) will be processewill be processedd in TRY at their maturit in TRY at their maturity datey date

• All invoices to be sent to banks from relevant institutions All invoices to be sent to banks from relevant institutions until until January January 11stst, 2005, will be in TL, 2005, will be in TL

• IInvoices nvoices following January 1following January 1stst, 2005, 2005, will be submitted as , will be submitted as TRYTRY



Checks / Checks / Promissory NotesPromissory Notes

• Checks and Checks and Promissory NotesPromissory Notes, which are , which are due in 2005due in 2005, , areare not requirenot requiredd to be in TRY to be in TRY. T. Those issuehose issuedd in TL in TL will be will be automatically converted by banksautomatically converted by banks

• TRY cheTRY chequeque books will be issued books will be issued to bank customers to bank customers following January 1following January 1stst, 2005. , 2005.

• TL cheTL chequeque books books can be used can be used in 2005 in 2005 by correcting the by correcting the monetary unitmonetary unit

• TL TL Checks presented in 2005Checks presented in 2005 will be converted and will be converted and processed processed in TRY.in TRY.

• Promissory Notes Promissory Notes issued in 2004 issued in 2004 and and due in 2005due in 2005 will be will be transacted in transacted in TRY after 1.1.2005TRY after 1.1.2005



Credit Cards Credit Cards

• Current limits will be converted to TRYCurrent limits will be converted to TRY based on the based on the conversion rate at 31 December 2004conversion rate at 31 December 2004

• Whilst statements for December will varyWhilst statements for December will vary according to the according to the bank; bank;

• Transaction detailsTransaction details will appear will appear in TL in TL

• Minimum Minimum payment payment and and total due total due paypayment ment will appear will appear in TL and TRYin TL and TRY

• StatementsStatements for year 2005 for year 2005 will be printed in TRYwill be printed in TRY

• PaymentsPayments may be done in may be done in TL TL or TRY or TRY banknotesbanknotes during 2005 during 2005

• CurrentCurrent automatic automatic payment instructions will be converted to payment instructions will be converted to TRYTRY at the night of 31 December 2004, at the night of 31 December 2004, payment instructions payment instructions in year 2005 will be in TRYin year 2005 will be in TRY



POS devicesPOS devices• Depending on the decision of banks; Depending on the decision of banks;

• Original amounts in POS slips and ATM receipts for the period Original amounts in POS slips and ATM receipts for the period 01.10.2004 - 31.12.2004 will be in TL, alternative amounts will 01.10.2004 - 31.12.2004 will be in TL, alternative amounts will be usable in TRYbe usable in TRY

• Original amounts for the period 01.01.2005 - 31.12.2005 will be Original amounts for the period 01.01.2005 - 31.12.2005 will be in TRYin TRY, and, depending on bank’s discretion, TL will be usable in , and, depending on bank’s discretion, TL will be usable in alternative amount presentations. alternative amount presentations.

• Following 01.01.2006, all POS and ATM receipts will be issued Following 01.01.2006, all POS and ATM receipts will be issued in only TRYin only TRY

• Standard for entering Kuruş digitsStandard for entering Kuruş digits in POS in POS devices has been devices has been decideddecided

• (000) button on POS device will be deactivated (000) button on POS device will be deactivated on on 01.01.200501.01.2005



MerchantMerchant ApplicationsApplications• File and data transfersFile and data transfers will be in will be in TRYTRY,,• Merchant Merchant reporting reporting will in will in TRYTRY• Merchant Merchant blockagesblockages due for 2005 due for 2005 will be converted to TRYwill be converted to TRYInternet BankingInternet Banking• Year 2004 will be viewed in TL, and year 2005 will be viewed Year 2004 will be viewed in TL, and year 2005 will be viewed

in TRY in TRY • All functionsAll functions will be will be TRY compatible TRY compatible • Future dated transactionsFuture dated transactions assigned to be processed in 2005 assigned to be processed in 2005

will be converted in TRYwill be converted in TRY based on the conversion rate valid in based on the conversion rate valid in the law at the night of 31 the law at the night of 31 DecemberDecember20042004

Other AdvantagesOther Advantages• Point calculationsPoint calculations provided in various products and provided in various products and

calculations for consequent advantages will be calculations for consequent advantages will be in TRYin TRY



EFT/EMKT EFT/EMKT SSystemsystems• Development activities Development activities for for EElectronic lectronic FFunds unds

TTransferransfer/E/Electronic Securities lectronic Securities TTransfer systemsransfer systems are are completedcompleted. T. Testestinging activities activities will be launched will be launched in Octoberin October

Foreign Exchange Buying / Selling TransactionsForeign Exchange Buying / Selling Transactions• Foreign exchange Foreign exchange sensitivitysensitivity will be expressed in will be expressed in 5 digits5 digits

Those having value Those having value over 1 TRYover 1 TRY will be expressed in will be expressed in 4 digits4 digits,,

Those having value Those having value below 1 TRYbelow 1 TRY will be expressed in will be expressed in 5 digits5 digitsFor example;For example;

Foreign Exchange CurrencyForeign Exchange Currency BuyingBuying Selling Selling

1 US Dollars 1 US Dollars 1,48801,4880 1,4950 TRY1,4950 TRY

1 Denmark Crone 1 Denmark Crone 0,243520,24352 0,24432 TRY0,24432 TRY



Stocks Stocks • Regulation Regulation currentlycurrently applied as per applied as per 1.000.000 TL nominal = 1.000 units =1 1.000.000 TL nominal = 1.000 units =1

lotlot is changed is changed to to 1,00 TRY nominal = 1 unit =1 lot1,00 TRY nominal = 1 unit =1 lot in the new system in the new system • IIn İMKB Stock Market n İMKB Stock Market , t, transactions will be executed over ransactions will be executed over 1 unit / nominal 1 unit / nominal

TRY and its multiplesTRY and its multiples, stock , stock prices will be announcedprices will be announced for the stock with 1 for the stock with 1 TRY nominal value and 2 digits will be used after the point. TRY nominal value and 2 digits will be used after the point.

• Remainder transactions will be abolishedRemainder transactions will be abolished within the Stock Exchange within the Stock Exchange following 01.01.2005following 01.01.2005

• Due to TRYDue to TRY conversion activities conversion activities , , no transactionno transaction will be executed in Stock will be executed in Stock Market Market between 30-31 December 2004between 30-31 December 2004

• Stocks entrusted to the customer will be converted to TRY by dividing each Stocks entrusted to the customer will be converted to TRY by dividing each unit to 1.000 unit to 1.000

For example;For example;Amount of stocks entrusted a customer, who owns Amount of stocks entrusted a customer, who owns 15.626 units of X stocks15.626 units of X stocks which has which has a market value of 8.950 TLa market value of 8.950 TL, following 01.01.2005 will be , following 01.01.2005 will be 15,626 units15,626 units, and in line , and in line with this, the with this, the price of this stockprice of this stock in the Stock Market will be announced as in the Stock Market will be announced as 8,95 TRY8,95 TRY. . Following TRY conversion, 15 units will be sellable in the Stock Exchange and Following TRY conversion, 15 units will be sellable in the Stock Exchange and 0,626 0,626 will not be transactedwill not be transacted in the Stock Exchangein the Stock Exchange since it the remained. since it the remained.



Investment FundsInvestment Funds

• PPricesrices will be announced in TRY with will be announced in TRY with 6 digits6 digits

Current priceCurrent price of the Investment Fund of the Investment Fund : : 6.365.697 TL6.365.697 TL

Price to be shown after 01.01.05 Price to be shown after 01.01.05 : : 6,365697 TRY6,365697 TRY

Treasury / Government BondTreasury / Government Bondss• Prices currePrices currently ntly announced over 100.000 TL nominal will be announced announced over 100.000 TL nominal will be announced

over 100 TRY nominal starting from 1 January 2005over 100 TRY nominal starting from 1 January 2005

• Nominal values of treasury bonds and government bonds will be converted Nominal values of treasury bonds and government bonds will be converted by dividing to 1.000.000 TLby dividing to 1.000.000 TL

For example;For example;The account of an investor who holds a The account of an investor who holds a 10.000.000.000 TL nominal10.000.000.000 TL nominal discount bond due on 26 January 2005 will be discount bond due on 26 January 2005 will be 10.000 TRY10.000 TRY nominal after nominal after conversion and the investor will get 10.000 TRY after the maturity ( on conversion and the investor will get 10.000 TRY after the maturity ( on 26.01.2005)26.01.2005)



RepoRepo

• Will be divided Will be divided by by 1.000.000 and entered into accounts after 1.000.000 and entered into accounts after rroundationoundation

For example;For example;

• A repo transaction which has a net return amount of A repo transaction which has a net return amount of 1.250.356.500 TL1.250.356.500 TL on 05 January, will be reflected to the on 05 January, will be reflected to the account of relevant customer as account of relevant customer as 1.250,36 TRY1.250,36 TRY








AgendaAgenda


• PParticipation of allarticipation of all critical critical Business and AdministrativeBusiness and Administrative UnitsUnits is essential. Fis essential. Followingollowing BUs are BUs are leadingleading ; ;

• Banking Banking Operations Operations • Accounting and Accounting and FinancFinancee• Treasury – FundTreasury – Fundss Management Management • Technology Technology • AuditingAuditing

• Project Management disciplinesProject Management disciplines ; ;• ProgramProgrammeme/Project Planning/Project Planning, , Monitoring, Monitoring, and and

ReportingReporting• Risk ManagementRisk Management• Communication ManagementCommunication Management• Test ManagementTest Management• Change Management Change Management /Configuration Management/Configuration Management• Quality Management Quality Management



MilestonesMilestones ; ;• Planning and Budget Approval Planning and Budget Approval

• Inventory Inventory gathering gathering and Impact Analysisand Impact Analysis• Establishment of Establishment of Test Methods and Test Methods and Test Test EnvironmentEnvironmentss • Plan and Budget approval Plan and Budget approval

• Application Application Development/TestingDevelopment/Testing• DetailDetaileded Analysis Analysis, C, Coding, Unit Testoding, Unit Testinging, Integration , Integration

TestTestinging, User Acceptance Test, User Acceptance Testinging• ConversionConversion

• Modifications in data structureModifications in data structure/tables/tables• Conversion programs and testsConversion programs and tests

• Production Roll-out (Phased/D-Day implementation)Production Roll-out (Phased/D-Day implementation)• TrainingTraining• D-day (31.Dec.2004) ActivitiesD-day (31.Dec.2004) Activities



BBudget udget RequirementsRequirementsHuman ResourcesHuman Resources

• Technology (internal and external source utilization) Technology (internal and external source utilization) • Participation of business units in User Acceptance TestsParticipation of business units in User Acceptance Tests

Hardware and ToolsHardware and Tools• Technology (Mainframe, DistributTechnology (Mainframe, Distributeded Systems, Test Systems, Test Branches, Branches, code remediation toolscode remediation tools))• Physical MoneyPhysical Money

• Adaptation of Adaptation of banknote banknote counting counting machinesmachines• Coin counting and packCoin counting and packagaging machinesing machines

Training / Training / StationaryStationary /Pr /Preprinted Material eprinted Material & Brochures& BrochuresStaff Staff CustomersCustomersCorrespondent BanksCorrespondent Banks Investors Investors AffiliatesAffiliates/Subsidiaries/Subsidiaries








AgendaAgenda


ObjectiveObjective • Information Information sharsharinging on on common problemscommon problems and and issuesissues

among banks , related corporates and authoritiesamong banks , related corporates and authorities• PPreparing reparing banksbanks as well as their as well as their employees and customersemployees and customers

for a successful migration to for a successful migration to TRYTRY

TRY TRY WorkWorkggroups roups /Subgroups/Subgroups• Project Project Monitoring Monitoring and and CommunicationCommunication• SecuritiesSecurities• Relationship management with Relationship management with Corporations Corporations • Legal Legal • AccountingAccountingTotaTotal of l of 50 pe50 peopleople have have participateparticipatedd in the in the activitiesactivities



• 150 questions and recommendations 150 questions and recommendations which are compiled which are compiled from all banks from all banks are are classified and evaluated in relevant Workclassified and evaluated in relevant Workggroupsroups

• CorrespondenceCorrespondence and meetings and meetings with with critical entitiescritical entities are held (are held (Utility Companies, Utility Companies, Authorities, Authorities, SSK, Ziraat Bank, BKM.VISA , Mastercard etc.)SSK, Ziraat Bank, BKM.VISA , Mastercard etc.)

• Since Since 19 December 200319 December 2003 following meetings are held :following meetings are held : 4 TRY Supreme Work4 TRY Supreme Workggrouproup 9 Project 9 Project Monitoring Monitoring and and Communication Sub-Communication Sub-WorkWorkggrouproup 99 SecuritiesSecurities Sub- Sub-WorkWorkggrouproup 11 Corporations 11 Corporations Sub-Sub-WorkWorkggrouproup 4 Legal 4 Legal Sub-Sub-WorkWorkggroup roup 3 general 3 general ((with the participation of all banks, private finance with the participation of all banks, private finance

institutions and authorized superior bodies institutions and authorized superior bodies ))

• Turkish Banking Association Turkish Banking Association Board of DirectorsBoard of Directors closely monitors the activities closely monitors the activities

• www.YTL.gen.tr site site offers a offers a discussion platform discussion platform for members for members

• Information to Information to Press & MediaPress & Media is supplied when requested is supplied when requested



• Meetings Meetings with with Public Relations Public Relations Outsource CompanyOutsource Company of Central Bank of Central Bank are heldare held

• Standard letter tStandard letter text ext providing information to customers providing information to customers of banksof banks is prepais preparedred

• DDeadline for the completion of testeadline for the completion of testss between between utility companies and utility companies and banksbanks is is agreed to be agreed to be end end of of October 2004 October 2004

• A A standard standard is is establishedestablished for files mutually exchangedfor files mutually exchanged between between banks banks and and their corporate customers (Example:999999999999.99)their corporate customers (Example:999999999999.99)

• AApplicationpplicationss are submitted are submitted to to legal authorities and institutionslegal authorities and institutions for for issues on which resolution is expected.issues on which resolution is expected.

• CCash register / POS integrationash register / POS integration, completion , completion of of preparations by preparations by cash register firms by cash register firms by 31.12.2004 31.12.2004

• Postponing new Postponing new nation-wide nation-wide projectsprojects

• Plans for Plans for TTRY transRY transitionition in Cyprusin Cyprus

• Enforcing Enforcing TRL and TRY codes in SWIFTTRL and TRY codes in SWIFT after January 1 after January 1stst

• Certification tests and self-test facilitiesCertification tests and self-test facilities with BKM, VISA and Mastercard with BKM, VISA and Mastercard




• Information aimed Information aimed to to mmonitoronitor project progress project progress in banksin banks is is consolidated by TBB and consolidated by TBB and shared with Central Bank and Banking shared with Central Bank and Banking Regulation and Supervision AgencyRegulation and Supervision Agency (BDDK) (BDDK) at the end of each at the end of each monthmonth starting from March 2004 starting from March 2004

General Questions :General Questions : 1. Is there a TRY Project Coordinator in your bank1. Is there a TRY Project Coordinator in your bank ? ? 2. Is there a TRY 2. Is there a TRY Steering Steering CommitteeCommittee ??3. Is there a General Work Plan for TRY Project3. Is there a General Work Plan for TRY Project ??4. Are 4. Are contracts contracts inin regards to regards to TRY TRY migrmigrationation finalized finalized with software vendors with software vendors ? ?

Milestones :Milestones :• Date of Analysis / Development CompletionDate of Analysis / Development Completion• Realization Percentage (%)Realization Percentage (%)• TTest Completion Date est Completion Date



Applications with Interfaces to other Banks/Data Processing CentersApplications with Interfaces to other Banks/Data Processing Centers• EFT/EMKTEFT/EMKT• POS ApplicationsPOS Applications• Check / Bond Applications Check / Bond Applications • SWIFTSWIFT• Credit CardsCredit Cards

BBank Specificank Specific Applications Applications • Deposits Deposits • CreditsCredits• Foreign Foreign OperationsOperations• AccountingAccounting and Financial Control and Financial Control• Treasury and Securities Treasury and Securities • Other Institution Payments/collectionsOther Institution Payments/collections• Alternative Distribution Channels (Alternative Distribution Channels (Non-Branch BankingNon-Branch Banking ) )• Payment /Collection SystemsPayment /Collection Systems






Critical Success FactorsCritical Success Factors

AgendaAgenda


Critical Success FactorsCritical Success Factors

• Timely receipt of Timely receipt of official nofficial notifications and communiqués otifications and communiqués from from AuthoritiesAuthorities (eg : (eg : the Ministry of Finance, SPK, IMKB, the Ministry of Finance, SPK, IMKB, TCMB TCMB ))

• Readiness of Readiness of Bank customersBank customers and other institutions and other institutions andand performance of performance of mutual testsmutual tests

• Obtaining support which is ought to be provided by Obtaining support which is ought to be provided by software software and data providerand data provider firms with no delay firms with no delay

• Amount fields in Amount fields in spreadsheetsspreadsheets (i.e. excel files ) (i.e. excel files )

• Teamwork and inter-institutional coordinationTeamwork and inter-institutional coordination


Thank you..Thank you..