VKF_FRAE_2017

PART I: INTRODUCTION 20 VakıfBank Annual Report 2017 The modern banking products and services offered by VakıfBank include corporate, commercial, agricultural, local government and SME banking, as well as retail and private banking. HISTORY AND OWNERSHIP STRUCTURE Deep-Rooted Tradition VakıfBank started its activities on April 13, 1954. 1954 VakıfBank, one of Turkey’s pioneering banks made yet another ground- breaking achievement in 2017 by being the first Turkish bank to issue a TL-denominated Covered Bond in the international capital markets, outside of issuances to multinational development banks. In addition to core banking products and services, VakıfBank also runs investment banking and capital markets operations. VakıfBank provides to its customers the widest possible range of financial products via cutting edge technologies. »» HISTORICAL DEVELOPMENT OF THE BANK VakıfBank was established under a private legal jurisdiction, Law numbered 6219 dated January 11, 1954, so as to utilize foundations’ revenues in the most efficient manner, contribute to Turkey’s savings rate with the understanding of work and management required by modern banking development and to channel the deposits collected toward the country’s economic development. VakıfBank commenced its operations on April 13, 1954, with an initial capital of TL 50 million. Since its foundation, the Bank has been subject to special legal provisions and has contributed significantly to the growth and development of the Turkish economy. »» LONG-STANDING TRADITION AND KNOW-HOW Representing a well-established tradition with longstanding experience and know-how in the Turkish banking system, VakıfBank has not only succeeded in becoming one of the most profitable banks in the sector, it has also helped the Turkish economy to grow, develop and integrate with the global economy. The Bank also managed to execute a rapid and sustainable growth strategy, quickly caught up with large-scale banks, and strengthened its leading position in the sector. Today, VakıfBank provides a complete range of modern banking products and services via its corporate, commercial and SME banking, as well as its retail and private banking business lines. In addition to core banking products and services, VakıfBank also runs investment banking and capital markets operations; the Bank provides a wide range of financial services including insurance, financial leasing and factoring through its financial subsidiaries, via cutting edge technologies. »» TURKEY’S PIONEER BANK Always a pioneer in international banking in Turkey, VakıfBank made yet another ground- breaking achievement in 2017 by being the first Turkish bank to issue a TL-denominated Covered Bond in the international capital markets, outside of issuances to multinational development banks, continues to be the most active bank in international capital market by issuing Eurobond under its Global Medium- Term Note Programme, as well as syndication loans, securitization loans and long -term and cost-effective issuances from diverse resources. »» THE FIRST TL-DENOMINATED COVERED BOND TRANSACTION OF TURKEY APART FROM THOSE MADE WITH MULTINATIONAL DEVELOPMENT BANKS Accelerating its operations with the vision of being the leading bank of strong Turkey, VakıfBank continues to ease the interest rate pressure in the TL deposit by creating long- term and cost-effective new non-deposit TL funding sources in 2017. In September 2017, the Bank issued Basel III-compliant Tier II subordinated notes amounting TL 525 million with 10 years maturity, as well as a 5.5 year maturity amounting TL 1.3 billion based on treasury transactions under the Mortgage Covered Bond Programme. The issuance through private placement is also the first TL denominated Covered Bond transaction of Turkey apart from those made with multinational development banks.