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PART III: FINANCIAL HIGHLIGHTS AND RISK MANAGEMENT
CONVENIENCE TRANSLATION OF PUBLICLY ANNOUNCED UNCONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH, SEE NOTE I. OF SECTION THREE
TÜRKİYE VAKIFLAR BANKASI TÜRK ANONİM ORTAKLIĞI
UNCONSOLIDATED FINANCIAL REPORT
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)
XVI. INFORMATION ON OBLIGATIONS OF THE BANK CONCERNING EMPLOYEE RIGHTS
Reserve for employee termination benefits
In accordance with existing Turkish Labor Law, the Bank is required to make lump-sum termination indemnities to each employee who has completed
one year of service with the Bank and whose employment is terminated due to retirement or for reasons other than resignation or misconduct. The
computation of the liability is based upon the retirement pay ceiling announced by the Government. The applicable ceiling amount as at 31 December
2015 is TL 3,828 (full TL) (31 December 2014: TL 3,438 (full TL)).
The Bank reserved for employee severance indemnities in the accompanying unconsolidated financial statements using actuarial method in compliance
with the TAS 19 –
Employee Benefits
.
As at 31 December 2015 and 31 December 2014, the major actuarial assumptions used in the calculation of the total liability are as follows:
Current Period
Prior Period
Discount Rate
%10.20
%8.60
Estimated Inflation Rate
%7.10
%6.50
Increase in Real Wage Rate
%8.10
%7.50
Other benefits to employees
The Bank has provided provision for undiscounted short-term employee benefits earned during the financial period (unused vacations, premium and
dividend) as per services rendered in compliance with TAS 19 in the accompanying unconsolidated financial statements.
According to TAS 19, actuarial gains and losses have been accounted in “Other Capital Reserves” shown under “Equity” associated with “The Statement
of Gains and Losses Recognized in Equity” for the respective reporting periods.
Pension fund
The employees of the Bank are the members of “Türkiye Vakıflar Bankası Türk Anonim Ortaklığı Memur ve Hizmetlileri Emekli ve Sağlık Yardım Sandığı
Vakfı” (“the Fund”) established on 15 May 1957 as per the temporary article no. 20 of the Social Security Law no. 506.
As part of Social Security Law’s 506 numbered, temporary article no.23, monthly income or salary is eligible for whose disabled with fund’s associates,
senility and death insurance is subjected according to the first paragraph of the temporary article no. 23 which states the Banks should transfer pension
funds to the Social Security Institution within three years after the issue date of the Banking Law no.5411, issued in the 1 November 2005 dated and
25983 numbered Official Gazette, has been cancelled by the Constitutional Court’s 22 March 2007 dated and 2007/33 numbered decision. Reasoned
ruling of the Constitutional Court has been issued on 15 December 2007 in the Official Gazette no. 26731. The reason for the cancellation decision by
Constitutional Court was stated as possible future losses on acquired rights of Fund members.
Following the publication of the ruling, the Turkish Parliament started to work on new legal arrangements and the Social Security Law no. 5754 (“the
Law”) has been approved on 17 April 2008. The Law is enacted by the approval of the President of Turkey and issued on the 8 May 2008 dated and
26870 numbered Official Gazette.
In accordance with the temporary article no. 20 of the Article no. 73 of the Law;
The discounted liability for each fund in terms of the persons transferred as at the transfer date, including the contributors left the fund, should be
calculated by the assumptions below:
a) The technical interest rate to be used for the actuarial calculation is 9.80%
b) Income and expenditures in respect to fund’s insurance division are considered in the calculation of discounted liability.
