İşbank 2009 Annual Report

Activities for which Support Services are Received in Accordance with the Regulation on Procurement of Support Services for Banks and Authorization of Organizations Providing this Service

İşbank’s Dividend Distribution Policy

Agenda of the Annual General Meeting

Report of the Board of Directors

Auditors’ Report

Dividend Distribution Proposal

Corporate Governance Principles Compliance Report

Audit Committee’s Assessments on the Operation of Internal Control, Internal Audit and Risk Management Systems, and Their Activities in the Reported Period

Independent Auditors’ Report

Unconsolidated Financial Statements

Financial Highlights and Key Ratios for the Five Years Period Including the Reported Period

Explanations on İşbank’s Financial Condition, Profitability and Solvency

Information on Risk Management Policies Applied per Risk Types

İşbank’s Credit Ratings

The Unconsolidated Year End Financial Report as of December 31, 2009

Information to Shareholders

İşbank Committees

The Audit Committee
The Committee has two members and is chaired by Mr. Caner Çimenbiçer, Chairman of the Board of Directors. The other member of the Committee is Prof. Dr. Savaş Taşkent, who is also a member of the Board.

The Committee is responsible for holding meetings within the framework of the related regulation and is obliged to inform the Board of Directors about the results of its activities and the measures to be taken by the Bank, practices that are required and its opinions on other matters that are deemed to be significant for the Bank to conduct its business safely.

The Audit Committee is in charge of:

Ensuring that the internal systems of the Bank function efficiently and sufficiently, that these systems and the accounting and reporting systems operate within the framework of the related regulations and the Bank’s policies and that the information produced has integrity,
Carrying out the preliminary assessment of independent audit firms and companies providing rating, valuation and support services to be selected and monitoring the firms, that are appointed by the Board, on a regular basis,
Ensuring that the internal audit functions of subsidiaries that are subject to consolidation are coordinated in line with the related regulations,
Reporting, presenting opinions and making recommendations to the Board on the functions, operations and related policies and regulations of the internal systems and the divisions that are part of the internal systems,
Evaluating the information and reports received from the independent audit firms and the divisions, that are part of the internal systems, about their operations,
Ensuring that the Bank’s financial reports are prepared in line with the related legislation, regulations and standards,
If required, gathering information, documents or reports from all Bank units, support service contractors and independent auditors and being subject to Board approval, receiving consultancy from those who are specialists in their respective fields,
Fulfilling other responsibilities determined by the related legislations and the duties given by the Board within this framework,
Reporting to and informing the Board about the results of its own operations, the measures needed to be taken in order for the Bank’s operations to be within the framework of the related legislation and Bank policies in a continuous and secure way and its evaluation, opinion and recommendation on any other issues that are deemed to be important.

In 2009, Audit Committee held 32 meetings and adopted 37 resolutions.

Turkish Republic of Northern Cyprus (TRNC) Internal Systems Committee
As per the resolution of the Board of Directors, dated 15.06.2009, Nr.35546, due to the branches in TRNC, TRNC Internal Systems Committee is established within the framework of TRNC Banking Law and related regulations. The committee has 2 members and is chaired by Mr. Caner Çimenbiçer, who is the Chairman of the Board of Directors. The other member of the committee is Prof. Dr. Savaş Taşkent, who is also a member of the Board. The Committee informs the Board of Directors on the results of its own activities, its opinion on the measures needed to be taken and the necessary practices to be implemented by the TRNC branches and other important issues in order for these branches to operate in a secure way.

TRNC Internal Systems Committee is responsible for ensuring the efficiency and sufficiency of the internal systems provided by the Bank in relation to the operation of the TRNC branches; ensuring the operation of the internal systems, accounting and reporting systems in line with the law and related regulations and ensuring the integrity of the produced information; carrying out the preliminary assessment of independent audit firms and other companies providing services directly related to other banking operations to be selected by the Board; and monitoring regularly and coordinating these companies that are selected and contracted by the Board.

In 2009, the TRNC Internal Systems Committee held 3 meetings and adopted 3 resolutions.

Credit Committee
İşbank’s Credit Committee makes resolutions on credit allocation within its authorization limit; makes decisions on demands to change the credit allocation conditions within its authorization limit and carries out any assignments regarding credits, given by the Board.

İşbank’s Credit Committee consists of three members; one of them is the Chief Executive Officer, who is also the chairman of the Committee and two members of the Board. Each year, at the first Board meeting after the Annual General Meeting, the Board members of the Credit Committee are determined until the next General Meeting. Two alternate Committee Members are also designated who will stand if need arises. The Committee makes decision on the credit allocation with consensus, after each Committee Member examines and signs the files. Resolutions made by the Committee with consensus are applied directly; and resolutions made by the Committee unanimously are applied after the approval of the Board of Directors.

By the end of 2009, 130 files were evaluated under the authority of the Board.

The Credit Committee of January-March 2009 consisted of three members: Chief Executive Officer, H. Ersin Özince; Deputy Chairman of the Board of Directors, H. Fevzi Onat and Board Member, Füsun Tümsavaş, with two deputy members Chairman of the Board of Directors, Caner Çimenbiçer and Board Member, Tülin Aykın. The members of the current Credit Committee that was established after the Bank’s Annual General Meeting dated 31.03.2009 are permanent member, Chairman of the Committee and Chief Executive Officer, H. Ersin Özince, Deputy Chairman of the Board of Directors, H. Fevzi Onat and Board Member, Füsun Tümsavaş. Deputy members of the Credit Committee are Board members Tülin Aykın and Hasan Koçhan.

Committee Members	Duty	Primary Duty
H.Ersin Özince H.Fevzi Onat Füsun Tümsavaş	Chairman of the Committee Member Member	Chief Executive Officer and Board Member Deputy Chairman of the Board Board Member

2009 January-March deputy members: Caner Çimenbiçer – Tülin Aykın
2009 April-December deputy members: Tülin Aykın – Hasan Koçhan

Credit Revision Committee
Being one of the committees of the Board of Directors, the Credit Revision Committee was founded as per the article of Revision of Limits within the context of Credit Risk Policy, which came into effect by the resolution of the Board of Directors dated 30.09.2003 and nr 30249, within the framework of the policy of reviewing the loan portfolio, evaluating the relations with credit customers at the end of the year and revising, when necessary, the credit limits allocated to the said persons and corporations. Within this framework, as per the resolution of the Board dated 17.12.2008 and nr 35143, the Credit Revision Committee, consisting of Deputy Chairman of the Board, H. Fevzi Onat and Board Members Tülin Aykın, Füsun Tümsavaş and Hasan Koçhan, reviewed all firms and risk groups under the authority of the Board of Directors and Credit Committee and completed, within this context, limit revision examinations of 6.313 group or individual firms and 376 correspondent banks in two parts as on 03.03.2009 and on 09.06.2009.

As per the resolution of the Board of Directors dated 31.12.2009 and nr 36077, the current Credit Revision Committee, consisting of Deputy Chairman of the Board, H. Fevzi Onat and Board members Tülin Aykın, Füsun Tümsavaş and Hasan Koçhan, is responsible for determining the credit limits of the related firms and institutions for the year 2010.

Corporate Social Responsibility Committee
The Corporate Social Responsibility Committee was established as per the Regulation on Social Responsibility Practice, which was adopted with the resolution of the Board, and its members are Board Members İsmet Atalay and Tülin Aykın, Deputy Chief Executives Özcan Türkakın and Hülya Altay and Head of the Corporate Communications Division Suat E. Sözen. The Committee operates in accordance with the Regulation principles, by considering the basic fields of contribution, which are determined as Education, Culture and Art, Health, Protection of the Environment and Other Activities.

In 2009, Corporate Social Responsibility Committee held 10 meetings and adopted 40 resolutions.

Risk Committee
Risk Committee is responsible for formulating the risk management strategies and policies İşbank will adhere to both on a consolidated and unconsolidated basis, presenting them to the İşbank Board of Directors for approval, and monitoring compliance with them. Committee is the common communication platform with the Bank’s executive divisions in terms of assessing the risk the Bank is exposed, making suggestions about the precautions to be taken and methods to be followed. The Committee’s principal duties are the following:

Prepare the risk strategies and policies, and present to the Board for approval.
Adjudicate by negotiating the issues addressed by Risk Management Division.
Recommend to the Board the level of risk limits for exposures, monitor the breach of limits and recommend to the Board regarding elimination of those breaches.
Recommend to the Board changes in risk policies if diverse circumstances require.
Monitor risk identification, definition, measurement, assessment, and management processes carried out by Risk Management Division.
Monitor accuracy and reliability concerning the risk measurement methodologies and their results.

Committee Members:

H. Fevzi Onat: Deputy Chairman and Member of Board of Directors
H. Ersin Özince: CEO, Head of Credit Committee
Aykut Demiray: Deputy Chief Executive, Head of Asset & Liability Management Committee
Suat İnce: Deputy Chief Executive
Rıza İhsan Kutlusoy: Head of Risk Management Division

Risk Committee is chaired by H. Fevzi Onat.

Risk Committee contributes to the configuration of Group risk policies also through consolidated group meetings. In the activities that the Risk Committee carries out on a consolidated basis,

Özcan Türkakın, Deputy Chief Executive
Burhanettin Kantar, Head of Equity Participations Division

also attend the meetings.

In 2009, the Risk Committee met a total of 12 times 4 of which were on a consolidated basis. In addition to the risk management evaluations of İşbank and its participations under consolidation, 12 risk management reports were submitted to the Committee and 15 resolutions were adopted.