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Financial Information and Risk
Management
İş Bankası
Annual Report 2013
TÜRKİYE İŞ BANKASI A.Ş.
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2013
2. Foreign Currency Transactions
The financial statements of the Parent Bank’s branches and financial institutions that have been established abroad are prepared
in functional currency prevailing in the economic environment that they operate in; and when they are consolidated, they are
presented in TL, which is the functional currency of the Parent Bank and also the currency used in presentation of the financial
statements.
Foreign currency monetary assets and liabilities on the balance sheet are converted into Turkish Lira by using the prevailing
exchange rates at the balance sheet date. Non-monetary items in foreign currencies carried at fair value are converted into Turkish
Lira by the rates at the date of which the fair value is determined. Exchange rate differences arising from the conversions of
monetary foreign currency items and the collections of and payments in foreign currency transactions are reflected to the income
statement. In accordance with TAS 21 “Effects of Changes In Foreign Exchange Rates”, net investments in non-domestic companies
are considered as non-monetary items, measured on the basis of historical cost and converted into Turkish Currency at the currency
rates at the transaction date, and also in accordance with TAS 29 “Financial Reporting In Hyperinflationary Economics”, the inflation
adjusted value is calculated by using the inflation indices prevailing between the date of transaction and final date that the inflation
adjustment is applied, 31 December 2004, and it is accounted by allocating provision amounts for any permanent impairment losses.
While the Parent Bank and Türkiye Sınai Kalkınma Bankası A.Ş., one of the consolidated subsidiaries, use their own foreign currency
exchange rates for their foreign currency transactions, other institutions residing domestically use the CBT rates for their foreign
currency transactions.
Assets and liabilities of the foreign branches of the Parent Bank and financial institutions that have been established abroad are
converted into TL by using the prevailing exchange rates at the balance sheet date. Income and expenses are converted by at
exchange rates at the dates of the transactions. Incomes and expenses of foreign financial institutions are converted into TL at
average foreign currency rates as long as there is not a significant fluctuation in currency rates during the period. The exchange rate
differences arising from the conversion are recorded in the “Other Profit Reserves” account under the shareholders’ equity.
III. Explanation on the Consolidated Companies
1. Basis of Consolidation:
The consolidated financial statements have been prepared in accordance with the procedures listed in the “Communiqué Related to
Regulation on the Preparation of the Consolidated Financial Statements of Banks” published in the Official Gazette numbered 26340
dated 8 November 2006.
a.
Basis of consolidation of subsidiaries:
A subsidiary is an entity that is controlled by the Parent.
Control is the power of the Parent Bank to appoint or remove from office the decision-taking majority of members of board of
directors through direct or indirect possession of the majority of a legal person’s capital irrespective of the requirement of owning
minimum fifty-one per cent of its capital; or by having control over the majority of the voting right as a consequence of holding
privileged shares or of agreements with other shareholders although not owning the majority of capital.
As per the “Communiqué Related to the Preparation of Consolidated Financial Statements of Banks” published in the Official
Gazette numbered 26340 dated 8 November 2006, as at the current period, the Parent Bank has no subsidiaries, qualified as credit
institutions or financial institutions, excluded from consolidation. Detailed information about the consolidated subsidiaries is given
in Section Five, Note I.h.3.
Under full consolidation method, the assets, liabilities, income and expenses and off-balance sheet items of subsidiaries are
combined with the equivalent items of the Parent Bank on a line-by-line basis. The book value of the Parent Bank’s investment in
each of the subsidiaries and the Group’s portion of equity of each subsidiary are eliminated. All significant transactions and balances
between the Parent Bank and its consolidated subsidiaries are eliminated reciprocally. Non-controlling interests in the net income
and in the equity of consolidated subsidiaries are calculated separately from the Group’s net income and the Group’s shareholders’
equity. Non-controlling interests are presented separately in the balance sheet and in the income statement.
Accounting policies used by the subsidiaries, that are included in the consolidated financial statements, are not different than the
Parent Bank’s.
