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Capital structures of state-owned banks are being strengthened

Preparations for strengthening of the capital structures of the state-owned banks within the reform package Structural Transformation Steps 2019 shared with the public on April 10th 2019, within the scope of the New Economy Program announced by the Ministry of Treasury and Finance has been completed.

TWF Market Stability and Balance Sub Fund (MSBSF), established on April 10, 2017 by Turkey Wealth Fund in line with its mission to support improvement and deepening in financial markets, plays an intermediary role in this process.

Accordingly, by the Ministry of Treasury and Finance; a total net EUR 3.3 billion 5-year term, zero coupon government bond at 4.61% coupon rate for Ziraat Bank, Halk Bank,Vakıf Bank, Export and Credit Bank of Turkey, and Development and Investment Bank of Turkey, and a total of net EUR 400 million, 5-year term, interest-free government bond, for Emlak Participation Bank, Ziraat Participation Bank and Vakıf Participation Bank of Turkey will be issued to MSBSF effective April 24, 2019.

MSBSF will create a cash resource by selling private government domestic debt securities to be issued by the Ministry of Treasury and Finance to public banks, and then use this source of cash for the purchase of subordinated bonds issued by public banks or for the use of subordinated loans.

As is known, in the Central Government Budget Act of 2019, it is stipulated that private government domestic debt securities can be issued up to 3 percent of the initial allowances determined by subparagraph (a) of the first paragraph of Article 1 of the law, the Ministry of Treasury and Finance is authorized to determine the distribution of private government debt securities to be issued between public banks and public institutions, and the maturity, interest and other conditions of the bonds.

We hereby submit the information to the public.

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