BOARD OF DIRECTORS

As detailed in the Turkish Commercial Code and the Banking Law, the Board of Directors is the body that carries the ultimate responsibility of the Bank for management and representation. According to Article 23 of the Banking Law, the Bank’s the Board of Directors consists of at least five members. The General Manager shall serve as the natural member of the board of directors pursuant to the provision of Article 23 of the Banking Law and shall carry this title as long as he is in charge of the general directorate. According to Article 17 of the Articles of Association of our Bank, the Board of Directors of our Bank consists of seven members elected for three years unless otherwise agreed by the shareholders. According to Article 17.5 of the Articles of Association, the Board shall hold a meeting with the attendance of at least 5 (five) of its members and the decisions shall be taken by a majority of the members present. For some important issues defined in the related article of the Articles of Association, it is required that all the members of the Board to participate and vote in favor of the motions. In 2016, 4 of the members of the Board of Directors and the General Manager of the Bank resigned from their duties, and 3 new Board members along with a new General Manager commenced their duties.

In accordance with Article 17.9 of our Bank’s Articles of Association, the Board of Directors convenes at least once every three months. The Board of Directors, whose duties and authorities are determined by the relevant legislation, the Articles of Association and the Bank’s in-house policy and directives, held a total of 5 meetings during 2016, one of which was the Management Statement to the external auditors of the Bank. All of the Board of Directors meetings held during the year of 2016 were held with the required quorum and the resolutions taken in these meetings were taken with the supporting vote of a sufficient number of members in terms of the quorum of decision. Information concerning the Board meetings held in 2016 is presented below:

Basic Duties and Responsibilities;

• The main duty of the Board of Directors is to lead the Senior Management to successfully implement the strategic plans.
• The Board of Directors decides on the determination of the primary objectives and develops the corporate strategy.
• The Board of Directors follows up the commercial performance of TFKB and provides assurance by means of reviewing the Performance and Risk reports periodically.
• The Board of Directors approves the establishment and abolition of the Board Level Committees and assigns authority to these committees.

The Board of Directors ensured the assignment and follow up of committee based duty and responsibility by establishing the Audit Committee, the Credit Committee, the Remuneration and Corporate Governance Committee as stipulated in the relevant banking legislation and by establishing the Risk Committee in line with the good practices.

CREDIT COMMITTEE

Board of Directors may assign the power to extend credits to the Credit Committee or Head Office within the frame of banking legislation and principles, procedures that are set by the Board. The Credit Committee was set up by the Board of Directors to exercise the power to extend credit within the framework of principles and procedures prescribed by banking laws and regulations. The Credit Committee approves credit allocation decisions within the limits of its authority, makes decisions about requests to change the terms of credit allocations which fall within the scope of its authority and fulfills such other credit-related duties as the Board of Directors may provide to it. Credit Committee reviews, recommends/approves the regulation, policy related to duty and authority area and other documents.

Our Bank’s Credit Committee consists of at least 3 members including the General Manager and is convened as required. In accordance with the provisions of the Regulation on Banks Credit Transactions, the Committee convenes with the participation of all members and reaches decisions unanimously. Any decisions that go beyond the authority of the Credit Committee or cannot be taken unanimously are transferred to the Board of Directors for a final decision. Our Bank Credit Committee met 8 times during 2016.

Basic Duties and Responsibilities;

• Within the framework of credit allocation limits set by the Board of Directors, the Credit Committee evaluates the credit files with a broad perspective and approves the credit files at the appropriate limits and conditions or, in the event that the files already have limits, the Committee recommends the credit files with their notes, if available, to the Board of Directors.
• The Committee approves write off and/or assignment of the securities to be subject to the disposition, credits, bad debt as staying within the limit foreseen under Write-off Receivables and/or Assignment to Asset Management Company Matrix approved by the Board.
• The Committee periodically and on a need basis, reviews and takes decision on the risk appetite statement (in terms of the credit risk and relevant aspects of concentration risk), internal performance indicator levels, credits, collections and provisioning policies, guidelines, processes and the future direction of credit activities in the Bank as per the recommendation of the Credit and Remedial Management Committee.

AUDIT COMMITTEE

The Audit Committee was set up by the Board of Directors to perform the duties required by Article 24 of the Banking Law and regulations and to assist the Board in the conduct of its auditing and supervisory activities. The Audit Committee consists of two non-executive members and convenes every three months. The Committee meetings are held with the participation of all members and decisions are taken unanimously.

The Audit Committee reports the results of its activities to the Board of Directors at least once every three months, at which time the Committee also presents its opinions about such matters as measures that need to be taken, practices that need to be followed, and other issues which it deems to be vital to the Bank’s ability to conduct its business confidently. During its meetings, the Committee discusses the findings and assertions of the Bank’s internal audit units and it refers such issues as it deems to be important to the Board of Directors. The Committee also discusses issues brought to its attention by the Bank’s own external auditors and/or by BRSA auditors and it refers these to the Board of Directors as well. During 2016 the Audit Committee convened 4 times at the Bank’s headquarters; it also met with the Bank’s external auditors on 4 occasions, at which time the findings of three quarterly audits and one year-end audit were discussed.

Basic Duties and Responsibilities;

• The Audit Committee is in charge of and responsible for supervising the effectiveness and adequacy of the internal control, risk management and internal audit systems of the Bank on behalf of the Board of Directors and the functioning of these systems and the accounting and reporting systems within the framework of the Law and the related regulations and the integrity of the information produced. The Audit Committee is in charge of and responsible for carrying out necessary preliminary assessments in the selection of independent audit bodies to be selected by the Board of Directors; regularly monitoring the activities of independent audit bodies selected by the Board of Directors; ensuring the maintenance and coordination of the internal audit functions of the consolidated bodies that are subjected to audit.
• The Committee is obligated to get regular reports from the control functions, formed as part of internal control, internal audit, risk management systems and Compliance in relation to the performance of their functions and report to the Board of Directors any issue that may have unfavorable impact on the continuity and safe conduct of the Bank’s operations or which is in breach of the applicable legislation or internal regulations.
• It controls the risk assessments, risk reports and other documentation submitted to the Committee. The Audit Committee supervises coordination among the Board of Auditors, the Internal Control Center and the Risk Management Center; keeps the Board of Directors informed of such matters; formulates principles, procedures, and policies applicable to such issues and submits these to the Board of Directors for its approval.

COMPENSATION AND CORPORATE GOVERNANCE COMMITTEE

The Remuneration and Corporate Governance Committee was established as a separate committee in 2016 and includes two non-executive members. The Committee convenes with the participation of all members and decides by unanimity. The Committee holds a meeting at least once a year.

The Remuneration and Corporate Governance Committee held a one-off meeting in 2016.

Basic Duties and Responsibilities;

• The Remuneration and Corporate Governance Committee leads and supports the activities that define and determine the corporate governance principles, ethical rules and corporate values. Within the framework of the market practices related to the Bank’s strategy and needs the Committee supports the Board of Directors in the determination of appropriate remuneration for members of the Board of Directors and the top management and employees. It also supports the Board of Directors in nominating eligible candidates for senior management.
• The Committee carries out supervision of the remuneration policies, processes and practices on behalf of the Board of Directors in order to ensure an independent and effective remuneration system.
• The Committee establishes a written remuneration policy with a content which will prevent excessive risk taking while ensuring long-term performance and efficiency and is in line with relevant internal and external legislation and the scope, structure and strategies of the Bank’s activities, the Bank’s risk appetite and long-term objectives.

RISK COMMITTEE

The Risk Committee was established in 2016 and consists of at least two members. The Committee is convened in accordance with needs and convenes with the participation of the majority of its members. The Committee takes decisions by majority vote.

In 2016, the Risk Committee held 2 meetings.

Basic Duties and Responsibilities;

• The Committee supports the Board by conducting oversight of risk management policies and practices.
• The Committee reviews the management effectiveness in managing and assessing risks inherent to its activities, and that risk acquisition and risk taking activities are aligned to the risk appetite and strategic objectives set by the Bank.
• The Committee will receive and review a risk report from management covering all risks taking activities periodically.