From a public unit to crucial giant

unit to ESTABLISHED AS A SMALL insure deposits in 1983, the Savings Deposit Insurance Fund (TMSF) has turned into an institution that ‘seizes’ financially-troubled companies and banks. Today the assets of 796 companies managed by TMSF amount to TRY 70.5bn. Speaking to daily DUNYA editors Hakan Guldag, Vahap Munyar and Seref •guz, TMSF Chairman Muhiddin Gulal offered some clarity on the activities of the institution and its future plans.

We first started to hear about the Savings Deposit Insurance Fund (TMSF) due to the liquidation process of banks and depositors’ riots during the 2001 economic crisis. TMSF took over the bankrupt banks and merged some with other banks in the market after crises arising in the banking sector in that period. As an institution bearing the loss of account owners on behalf of the public, it became an important organization in the transfer of banks to the market after their management activities. Thus, TMSF has turned into a public administration with extraordinary authorities for the collection of receivables of bankrupt banks.

However, especially recently, we have started to see it in the news as an institution ‘seizing’ companies and banks that find themselves in financial trouble for a variety of reasons. But, beyond the seizures, TMSF actually has crucial functions in terms of protecting the public’s interests and contributing to the national economy and financial stability of the country. For instance, the risk-based insurance premium system implemented in Turkey was shown to be one of the best practices in the world in 2012, according to the Financial Stability Board’s (FSB) Thematic Review on Deposit Insurance System. It’s a persistent fact that TMSF’s ‘proactive’ management approach had a role in this.

In practical terms, TMSF was established as a small unit to insure deposits under the Central Bank’s representation and administration in order to protect account owners’ rights and interests in 1983. But its corporate status, functions and responsibilities evolved with consecutive financial crises. “TMSF successfully managed numerous companies in terms of collecting public receivables, brought them into the national economy by putting them on the market for sale, and developed important skills, as well as qualified personnel after the 2001 banking crisis,” says TMSF Chairman Muhiddin Gulal (see the success story of Erciyes Anadolu Holding under TMSF management on page 18).

When Banking Law No. 5411 entered into force in 2005, TMSF became a legal regulatory public entity with broad authority regarding collection of receivables, shaping bank resolutions and determining policies on deposit insurance in accordance with international norms.

Afterward, TMSF shouldered more responsibilities depending on the developments in the country’s politics. Following the 2016 Turkish coup attempt, tasks and powers of trusteeship, which were possessed by companies assigned to a trustee due to their attachment, relation or contact with terrorist organizations (namely FET•, the Gulenist terrorist organization), were handed over to TMSF with the Decree Law No. 674. To put it simply, TMSF performs its duties along with the powers dedicated to it, according to the Banking Law No. 5411 and the Law No. 6758 on amending and accepting some regulations made by the Decree Law within the scope of the State of Emergency and other relevant legislation today. TMSF’s four main functions are deposit insurance, bank resolution, recovery and trusteeship operations, according to the relevant legislation.

TMSF can take over the management and supervision of a company, when it collects public receivables within the frame of powers specified by the Banking Law or when it will be appointed as trustee to the companies or assets, whose relation or contact with terrorist organizations are confirmed by court decision. “Trustees are chosen from people who are experts in their subjects, have experience in the public or private sector, are experienced and competent in financial and legal issues and are trusted,” Gulal notes.

TOTAL ASSETS

AMOUNT TO TRY 70.5BN

•n the company front, TMSF takes the Commercial and Economic Integrity (TIB) decision by exercising its authorities in the Banking Law and the relevant legislation. Then it takes a variety of measures, including loan supports, so that these companies