Ankara - TURKEY
19 FEBRUARY 2002

SECTION I
INTRODUCTION

The supervisory authorities of Romania and Turkey have reached the following understanding in order to establish an arrangement for the sharing of supervisory information to facilitate the performance of their respective duties and to promote the safe and sound functioning of credit organizations in their respective countries.

The supervisors in Romania and Turkey express, through this understanding, their willingness to cooperate with each other on the basis of mutual trust and understanding in the supervision of cross-border establishments within their respective jurisdictions. The supervisors in Romania and Turkey will use their best endeavours to cooperate in supervisory procedures, and to notify and provide to each other relevant information regarding any material supervisory concerns in respect of a cross-border establishment.

SECTION II
DEFINITIONS

For the purposes of this Memorandum of Understanding,

1. "Supervisor of Romania" and "relevant authority" refers to the National Bank of Romania, which is responsible for the licensing and supervision of credit organizations. (which include only banks and credit co-operatives)
2. "Supervisor of Turkey" and "relevant authority" refers to Banking Regulation and Supervision Agency of Turkey and Banking Regulation and Supervision Board as its decision making body.
3. "Credit organization" is an entity, which carries on banking business (general or specialized) and whose activities are subject to licensing and banking supervision under the laws of the countries,
4. "Cross-border establishment" is defined to include a branch, a representative office, a subsidiary or any other entity within the jurisdictions, which gives rise to the need for consolidated supervision,
5. "Branch" of a credit organization (a branch) is an operating entity, which does not have a separate legal status and is thus an integral part of a credit organization incorporated in one of the countries.
6. "Subsidiary credit organization" (a subsidiary bank) is a legally independent institution, wholly owned by, or otherwise under the control of a credit organization which is incorporated in the country other than that of the subsidiary.
7. "Representative office" is an office through which the interests of a credit organization are promoted or assisted but at which no banking business are carried on.
8. "Jurisdiction" means the country, state or other territory, as the case may be, in which a supervisor has legal authority, power and/or jurisdiction by law.
9. "Host Country Supervisor" is the responsible supervisory authority of the country where a cross-border establishment is established.
10. "Home Country Supervisor" is the responsible supervisory authority of the country where is incorporated a credit organization that has set up a cross-border establishment.
11. "Requested Authority" is the supervisory authority from which assistance is requested.
12. "Requesting Authority" is the supervisory authority, which initiates a request for assistance.

SECTION III
SHARING OF INFORMATION

1. The Relevant Authorities in Romania and Turkey recognize that information should be shared in order to facilitate effective consolidated supervision of credit organizations operating across their national borders.
2. The banking supervision authorities of the host country shall not prevent the entities above mentioned from submitting information and other reports to their Head Office or parent banks necessary to compile consolidated reports in accordance with the forms established in the home country.
3. Information-sharing shall include contact during the authorization and licensing process, in the supervision of on-going activities of such entities, in case of setting up further entities or a change in ownership that is subject to the permission of the relevant authority and revocation of a licence.
4. In connection with the authorization and licensing process,
   1. The Host Country Supervisor shall notify the Home Country Supervisor, without delay, of applications for approval to establish Cross-border Establishments in the host Jurisdiction;
   2. The Home Country Supervisor has, upon request, to assist the host country supervisor by verifying or supplementing the required information submitted by the applicant credit organization. The requested authority shall consider such application within reasonable time limits and in accordance with the procedures established by its national banking legislation or regulations;
   3. Upon request, the Home Country Supervisor shall inform the Host Country Supervisor whether the applicant credit organization is in compliance with the home country banking regulations (including the amount of own founds and the solvency ratio of the parent bank if is not legally compelled) and may be expected, given its administrative structure and internal controls, to manage the cross-border establishment in an orderly manner;
   4. The home country supervisor shall inform the host country supervisor about the nature of its regulatory and supervisory system and the extent to which it will conduct consolidated supervision over the applicant credit organization. Similarly, the host country supervisor shall indicate the scope of its supervision and indicate any specific features that might give rise to the need for special arrangements;

   5. To the extent reasonable and permitted by law, the home and host country supervisors will share information on the fitness and properness of the prospective directors, managers and relevant shareholders of a cross-border establishment.
5. In connection with the ongoing supervision of their Cross-border Establishments, the two supervisors undertake to use their best endeavours to:
   1. Provide relevant information to their counterpart regarding material developments or supervisory concerns in respect of the operations of Cross- border Establishments;
   2. Respond to requests for information on their respective national regulatory systems and inform each other about major changes, in particular those, which have a significant bearing on the activities of Cross-border Establishments;
   3. Inform their counterpart about any event, which has the potential to endanger the stability of the Cross-border Establishments;
   4. Inform their counterpart of material administrative penalties imposed, or other formal enforcement action taken against a Cross-border Establishment; and
   5. Facilitate the transmission of other relevant information that might be required to assist with the supervisory process.
6. In case of opening up further entities or a change in the ownership structure that is subject to the permission of the Relevant Authority, the two supervisors shall notify each other.
7. In case of revocation of a licence, the two supervisors shall notify each other and provide reasons behind such action.

SECTION IV
ON-SITE INSPECTIONS

1. The supervisors of Romania and Turkey agree that cooperation is particularly useful in assisting each other in carrying out on-site inspections of Cross-border Establishments in the host country.
2. The Home Country Supervisor undertakes to notify the Host Country Supervisor of plans to inspect or examine a Cross-border Establishment or to appoint an internationally reputable (accredited) independent auditing company to conduct an examination on its behalf under certain circumstances which might make it necessary and upon the mutual agreement of the authorities, and to indicate the purposes and scope of the visit and its expected duration, and also the names of examiners.
3. Requests for on-site inspections need the written consent of the Host Country Supervisor. The banking supervision authorities of the host country shall not prevent the banking supervision authorities of the home country from carrying out on-site inspections, as referred to in art. 2 above, and shall give the banking supervision authorities of the home country access to supervisory information which they may need to conduct banking supervision. If either party has reason to believe that an on-site inspection by the other party is for non-supervisory purposes, such party shall have the right to prevent the inspection or terminate it.
4. The Host Country Supervisor shall accompany all examinations or inspections to be carried out in the host country by the home country supervisor.
5. Following the inspections, the supervisory authorities shall exchange views on their findings and on finalizing the inspection report; the Home Country Supervisor will provide the Host Country Supervisor with a copy of the report.

SECTION V
REQUESTS FOR INFORMATION AND INSPECTIONS

1. Upon receipt of a written request, the requested supervisor shall use its best endeavours to provide the requested information or process the request for on-site inspections regarding the Cross-border Establishments of credit organizations incorporated in the requesting supervisor's country. They shall also notify one another about the circumstances preventing or delaying the fulfilment of a request for assistance.
2. A request for assistance within the framework of this Memorandum may be denied wholly or partially, if the requested authority believes that the fulfilment of the request will run counter to its national legislation. In such cases, the requesting authority shall be notified about the denial and given the reasons for it in writing.
3. Requested information normally would not include customer account information unless this is of particular relevance to the supervisory concern prompting the request and if this is the case, such customer account information shall be collected and provided by the requested supervisor itself.
4. Requests for information shall be made in writing. However, where the supervisory authorities perceive a need for expedited action, requests may be initiated in any form but should be confirmed subsequently in writing.
5. Where one authority has information that will assist the other Authority in the performance of its regulatory and supervisory functions, the former may provide such information, or arrange for it to be provided, on a voluntary basis even though the other authority has made no request.

SECTION VI
PROTECTION OF INFORMATION

1. Information should be shared to the extent reasonable and subject to relevant statutory provisions, including those restricting disclosure.
2. Any confidential information received from the other supervisor will be used exclusively for lawful supervisory purposes.
3. To the extent permitted by law, each supervisor shall hold confidential all information obtained and documents received from the other party. In this regard, employees of both supervisory authorities are generally bound to hold confidential all information obtained in the course of their duties.
4. It is understood that, in certain circumstances, a supervisor in one Jurisdiction that receives confidential information from a supervisor in another Jurisdiction may, to the extent permitted by law, be compelled to disclose that information to a third party supervisory authority or a law enforcement or regulatory body. In such a case, the supervisor shall notify the supervisor that originated the information prior to passing it to a third party.
5. In cases where a supervisor receives a request for information from a third party, but disclosure is not legally compelled, the supervisor receiving the request shall consult with the supervisor that originated the information in order to receive its views and consent on the propriety of releasing such information. However, such information should only be released if there is a legitimate interest in the matter and if the third party is also bound to hold the information confidential.

SECTION VII
ONGOING COORDINATION

1. The supervisors in Romania and Turkey may promote their cooperation through visits for information purposes and by exchanges of professional experience.
2. In addition, the supervisory authorities in the two countries would pursue staff training programs that would incorporate input and support from both of the supervisors and would reinforce sound supervisory practices in both countries.
3. The supervisors of Romania and Turkey would conduct meetings as often as appropriate to discuss issues of supervisory concern.

SECTION VIII
OTHER PROVISIONS

1. The arrangements outlined in this Memorandum are intended to enhance the existing working relationship, but they are not restrictive.
2. The supervisory authorities may make amendments to this Memorandum of Understanding by mutual agreement and by a written notice specifying the reasons behind such action.
3. If it appears that the requested authority will incur substantial costs in responding to a request for assistance under this Memorandum of Understanding, the authorities will establish cost-sharing arrangements before responding such a request.
4. The parties shall continue to honour the terms of this Memorandum of Understanding unless one of the parties requests its termination. This Memorandum of Understanding will then stay in effect until the expiration of 15 days after either supervisory authority gives written notice to its counterpart indicating its intention to terminate this Memorandum of Understanding. However, the last and existing request for assistance made prior to such notification shall be honoured by the authorities if possible under the conditions set forth under this Memorandum of Understanding.
5. In the event of termination of this Memorandum, information obtained under this Memorandum will continue to be treated confidentially.
6. Both supervisory authorities shall designate contact persons for carrying out the provisions of this Memorandum of Understanding.
7. This Memorandum of Understanding comes into force as of the date it is signed by both parties.
8. This Memorandum of Understanding is written in English in two copies with the same validity, each party obtaining a copy.

Executed in Ankara, Turkey, on February 19, 2002.