RESTRICTED
WORLD TRADE S/FIN/W/12/Add.12
17July1997
ORGANIZATION(97-3242)
Original: English Committee onTrade inFinancial Services
COMMUNICATION FROM TURKEY
Initial Offer onFinancial Services
Addendum
ThefollowingcommunicationiscirculatedattherequestofTurkeytoMembersoftheCommittee
onTrade inFinancial Services.
_______________
Turkey hereby presents itsinitial offer ofspecific commitments onfinancial services asthe
submission forthemid-July deadline.
Theattached initial offerreflects recent changes ininternal regulatory framework ofTurkey.
Itsuggests elimination orrelaxation ofsome restrictions, clarifies certain points andimproves wording
aswell.
Theinitial offerisconditional. Thedecision tomaintain itwilldepend onotherWTO Members '
readiness toachieve asignificantly higher levelofliberalisation commitments. Itisunderstood that,
pursuant totheSecond Decision onFinancial Services of21July1995, Turkey retains therightto
modify orwithdraw allorpartofthespecific commitments onfinancial services andtolistMFN
exemptions.S/FIN/W/12/Add.12
Page2TURKEY
SPECIFIC COMMITMENTS -INITIAL OFFER ONFINANCIAL SERVICES
Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
7. FINANCIAL SERVICES
1. Turkey undertakes commitments onFinancial Services inaccordance withtheprovisions ofthe"Understanding onCommitments inFinancial Services"
(theUnderstanding).
2. Themarket access commitments inrespect ofmodes (1)and(2)apply onlytothetransactions indicated inparagraphs 3and4ofthemarket access section
oftheUnderstanding respectively.
3. Theadmission tothemarket ofnewfinancial services orproducts maybesubject totheexistence of,andconsistency with, aregulatory framework aimed
atachieving theobjectives indicated inArticle 2.1oftheFinancial Services Annex.
Measures applicable toallsectors infinancial services
Banking Establishment ofabank which hastobein
theform ofajoint-stock company and
opening ofthefirstbranch ofaforeign
bank require authorization from theCouncil
ofMinisters. Following theestablishment,
operation license from Undersecretariat of
Treasury must beobtained inorder tostart
collecting deposits orexecute banking
operations.
Foreign banks wishing toestablish branches
orrepresentative offices must notbe
prohibited from performing banking
operations intheir country oforigin orin
thecountries where theyoperate.
According totheBanks Act,lending limits
forthebranches offoreign banks arebased
onbranch capital rather thanworldwide
capital.S/FIN/W/12/Add.12
Page3Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
Theestablishment ofdomestic orforeign
banks aswellasthefirstbranch ofanon-
resident bank aresubject tothesame
amount ofminimum capital requirement.
Acquisitions ortransfer oftheshares
representing aratio equal orhigher than5,
20,33and50percentofthecapital is
subject totheauthorization ofthe
Undersecretariat ofTreasury.
Insurance Inorder tobeestablished inTurkey,
insurance andreinsurance companies have
tobefounded intheform ofajoint-stock
oramutual company. Foreign insurance
andreinsurance companies mayoperate in
Turkey byopening branches aswell.
However, reinsurance companies cando
reinsurance business without fulfilling
establishment conditions mentioned above.Foreign commercial presence orpresence
offoreign natural persons regarding
services auxiliary toinsurance ispermitted
onlyforconsultancy andriskmanagement
services.
Establishment ofinsurance andreinsurance
companies oropening ofabranch ofa
foreign insurance orareinsurance company
issubject toprior permission ofthe
Ministry ofState. Following the
establishment, operation licence from
Undersecretariat ofTreasury must be
obtained inorder tostartinsurance or
reinsurance business.S/FIN/W/12/Add.12
Page4Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
Aforeign insurance orreinsurance
company wishing toopen abranch in
Turkey must nothave been prohibited from
operating ininsurance field initscountry
oforigin orintheother countries where it
hasbeen permitted tooperate.
Establishment issubject toaminimum
paid-in capital requirement.
Acquisition ortransfer ofshares
representing 10,20,33,50percentor
higher ofthecapital issubject tothe
authorization ofUndersecretariat of
Treasury.
Engaging ofnatural persons inbrokerage
business orestablishment ofaninsurance
andreinsurance broker company oropening
ofabranch ofaforeign insurance and
reinsurance broker company inTurkey is
subject toprior permission andobtaining
operation licence from Undersecretariat of
Treasury. Such afirmmust befounded in
theform ofajoint-stock oralimited
liability company, andmust possess the
required minimum paid-in capital.S/FIN/W/12/Add.12
Page5Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
Securities marketInsurance andreinsurance brokers have to
reside inTurkey andtheymust have at
least 5years ofexperience asbrokers in
their countries oforigin.
Fortheestablishment ofcapital market
institutions (*)thepermission oftheCapital
Market Board isrequired. Ifbanks or
insurance companies apply totheBoard to
form amutual fund ortoincrease fund
capital, theopinion oftheUndersecretariat
ofTreasury hastobeobtained tofinalize
theapplications. Opening ofbranches and
agencies bysecurities intermediary
institutions established inTurkey also
requires theBoard 'spermission. The
permission oftheBoard isrequired for
obtaining 5percentormore ofthecapital
ofalready established securities
intermediary institutions byoneshareholder
(real orlegal persons).Establishment ofbranches and
representative offices offoreign non-bank
intermediary institutions isnotpermitted.
Intermediary institutions, investment
corporations, portfolio management
companies andrating agencies canonlybe
established intheform ofajoint-stock
company.
*According totheCapital Market Law, capital market institutions arespecified asfollows:
(a) Securities intermediary institutions.
(b) Investment Corporations.
(c) Mutual Funds.
(d) Other capital market institutions permitted tooperate inthecapital market such asclearing andcustodial houses, rating andauditing institutions, etc.S/FIN/W/12/Add.12
Page6Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
Additionally, operations ofallcapital
market institutions andbanks aresubject to
thepermission oftheBoard. While giving
such permission, theBoard issues
"Authorization Certificates" forthe
activities tobecarried outbyeach
institution.
Rating agencies should have aknow-how
agreement withaninternational rating
agency recognized bytheBoard. Incase
ofpartnership withaninternational rating
agency recognized bytheBoard, theshare
oftheinternational rating agency shall not
belessthan25percentofthecapital ofthe
domestic rating agency.
OTHER FINANCIAL
SERVICES
A.Financial leasing
companiesFinancial leasing companies (lessors) can
beestablished intheform ofajoint-stock
company.
Establishment andopening ofabranch ofa
lessor aswellasopening ofabranch ofa
foreign lessor arerequired prior permission
oftheMinistry ofState towhich the
Undersecretariat ofTreasury isattached.Theminimum paid-in capital required for
opening abranch byaforeign lessor is
more thanthatofestablishing acompany.S/FIN/W/12/Add.12
Page7Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
Aminimum paid-in capital isrequired for
theestablishment ofalessor andforthe
opening ofabranch byaforeign lessor.
Foreign lessors mayopen branches in
Turkey provided thattheyareauthorized to
dealinfinancial leasing intheir home
country orinthecountries where they
operate.
B.Factoring andconsumer
credit companiesFactoring companies andconsumer credit
companies must beestablished intheform
ofajoint-stock company.
Fortheestablishment ofthese companies,
prior permission oftheUndersecretariat of
Treasury must beobtained andminimum
paid-in capital isrequired.
C.Authorized institutions
(foreign exchange
dealers)Inorder toengage inactivities asan
authorized institution, thepermission ofthe
Undersecretariat ofTreasury must be
obtained.
Authorized institutions must be
incorporated intheform ofajoint-stock
company. Establishment ofanauthorized
institution andopening abranch offoreign
legal entities performing similar activities
necessitates aminimum capital
requirement.S/FIN/W/12/Add.12
Page8Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
D.Precious metals
exchangePrecious metals intermediaries (banks,
authorized institutions, precious metals
intermediary institutions aswellasresident
andnon-resident natural orlegal person)
canoperate inIstanbul Gold Exchange after
being granted theoperation licence bythe
Undersecretariat ofTreasury andbeing
registered bytheIstanbul Gold Exchange.
A.Insurance andinsurance
related services
(a)Direct insurance
(i)Non-life (1),(2) Unbound except:
(a)Thehullinsurance ofaircrafts,
helicopters andships which are
purchased through aforeign loan
orleased through afinancial
leasing contract from abroad,
provided thattheinsurance period
islimited totheterm ofthecredit
orleasing contract.
(b)Marine liability insurance.
(c)Transportation insurance of
imported andexported goods.
(d)Individual accident, sickness and
motor vehicle insurance during
anytravel abroad.(1),(2) NoneS/FIN/W/12/Add.12
Page9Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
(3)None (3)Compulsory traffic insurance of
publicly owned motor vehicles can
onlybedone bythose insurance
companies whose majority ofpaid-in
capital belongs toTurkish citizens.
(4)None (4)None
(ii)Life (1)Unbound
(2)None
(3)None(1)None
(2)None
(3)Acertain percentofpaidinsurance
premiums isdeducted from gross
wages andcorporate income inorder
todetermine realindividual and
corporate taxable income. Insurance
covered inthisperspective must be
underwritten byaninsurance
company inTurkey.
(4)None (4)None
(b)Reinsurance and
retrocession(1),(2) Non-life insurance premiums,
after holding theretention, aresubject
toacertain percentcompulsory
ceding toMilli Reinsurance Co. If
thetotalretention ratio ofthe
company reaches to75percent,
compulsory ceding iscancelled.(1),(2) None
(3)None (3)None
(4)None (4)NoneS/FIN/W/12/Add.12
Page10Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
(c)Insurance intermediation (1),(2) Unbound fordependent
intermediaries (agencies, producers).
Dependent intermediaries canactonly
onbehalf ofinsurance companies
authorized tooperate inTurkey.(1),(2) None
(3)Insurance andreinsurance brokers and
fully authorized agencies canonly
engage ininsurance related business.(3)None
(4)Unbound except administrative and
technical personnel.(4)None
(d)Services auxiliary to
insurance(1),(2) None except adjusters and
actuaries.
(3)None
(4)None except adjusters andactuaries.(1),(2) Adjusters andactuaries have to
beTurkish citizens.
(3)None
(4)Adjusters andactuaries have tobe
Turkish citizens.
B.Banking andother
financial services
(e)Acceptance ofdeposit (1),(2) None (1),(2) None
(3)Norealperson orlegal entity other
thanthose authorized under theBanks
Actorunder specific regulations may
accept deposits.(3)None
(4)None (4)NoneS/FIN/W/12/Add.12
Page11Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
(f)Lending ofalltypes
(i)Consumer credit (1),(2) None
(3)Banks andconsumer credit companies
maylendconsumer credits.
(4)None(1),(2) None
(3)None
(4)None
(ii)Factoring (1),(2) None
(3)Banks andfactoring companies can
engage infactoring activities.
(4)None(1),(2) None
(3)None
(4)None
(iii)Mortgage credit
andfinancing of
commercial
transactions(1),(2)None
(3)Banks canengage intrading ofthese
activities.
(4)None(1),(2)None
(3)None
(4)None
(g)Financial leasing (1),(2) Leasing contracts related to
cross-border leasing transactions must
bepermitted bytheUndersecretariat
ofTreasury.
(3)Lessors canengage infinancial leasing
transactions.
(4)None(1),(2) Regarding cross-border
leasing transactions, theannual rent
maynotbelessthantheTurkish
Liraequivalent of$25,000.
(3)None
(4)NoneS/FIN/W/12/Add.12
Page12Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
(h)Allpayment andmoney
transmission services(1),(2)None
(3)Transfers offoreign exchange abroad
must becarried outthrough the
banking system.(1),(2)None
(3)None
(4)None (4)None
(i)Guarantees and
commitments(1),(2) None except thatperformance
bonds withthetransactions specified
intheState Tender Lawmust be
obtained from abank inTurkey.(1),(2)None
(3)None (3)None
(4)None (4)None
(j)Trading forownaccount
orforaccount of
customer
(i)Money market
instruments(1),(2) None (1),(2) None
(3)Banks andsecurities intermediary
institutions canengage intrading of
money market instruments.(3)None
(4)None (4)None
(ii)Foreign exchange (1),(2) None (1),(2) None
(3)Banks andauthorized institutions can
engage inforeign exchange trading.(3)None
(4)None (4)NoneS/FIN/W/12/Add.12
Page13Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
(iii)Derivative products (1),(2) None
(3)Banks andrelated intermediary
institutions canengage intrading of
these activities.
(4)None(1),(2) None
(3)None
(4)None
(iv)Exchange rateand
interest rate
instruments(1),(2)None
(3)Banks andrelated intermediary
institutions canengage intrading of
these activities.
(4)None(1),(2)None
(3)None
(4)None
(v)Transferable
securities(1),(2) None
(3)Banks andsecurities intermediary
institutions canengage intrading of
these activities.(1),(2) None
(3)None
(4)None (4)NoneS/FIN/W/12/Add.12
Page14Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
(vi)Other negotiable
instruments and
financial assets,
including bullion(1),(2) None
(3)Banks andrelated intermediary
institutions canengage intrading of
these activities. Only, precious metals
intermediaries canengage intrading
ofbullion intheIstanbul Gold
Exchange.
(4)None(1),(2) None
(3)None
(4)None
(k)Underwriting and
placement(1),(2) None
(3)Banks andsecurities intermediary
institutions canprovide underwriting
andplacement services forthe
securities tobeissued after being
registered bytheCapital Market
Board.(1),(2) None
(3)None
(4)None (4)None
(l)Money broking (1),(2),(3),(4) Seeheadnote (3)on
Financial Services.
(m)Asset management
portfolio management(1),(2) None
(3)Banks, securities intermediary
institutions andportfolio management
companies canprovide these services.(1),(2) None
(3)None
(4)None (4)NoneS/FIN/W/12/Add.12
Page15Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
(i)Collective
investment
management(1),(2) None
(3)Mutual funds andinvestment
corporations canengage incollective
investment management.(1),(2) None
(3)None
(4)Themajority ofthemembers ofthe
board ofdirectors ofaninvestment
corporation must have Turkish
nationality.(4)None
(ii)Pension fund
management(1),(2),(3),(4) Seeheadnote (3)on
Financial Services.
(iii)Custodial,
depository andtrust
services(1),(2) None
(3)Banks andsecurities intermediary
institutions operating incapital market
canprovide custodial services fortheir
customers 'securities, until their
buying-selling orders arerealized.(1),(2) None
(3)None
(4)None (4)None
(n)Settlement andclearing
services(1),(2) None
(3)Only Takasbank A.S¸.canprovide
securities settlement andclearing
services.(1),(2) None
(3)None
(4)None (4)None
(o)Provision andtransfer of
financial information(1),(2) None
(3)None(1),(2) None
(3)None
(4)None (4)NoneS/FIN/W/12/Add.12
Page16Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
(p)Advisory, intermediation
andother auxiliary
services(1),(2) None
(3)None
(4)None(1),(2) None
(3)None
(4)None