For BQCH the illegal transformation of the Ziraat bank is legitimate, called the Law on Banks.

The CEC considers it legitimate and based on existing laws and regulations the transformation of Ziraat Bank from foreign branches into action society in Kosovo.

In response to Periscope, the CEC relies on Article 12 of the Bank Law, which, according to them, gives them the exclusive right to seek such a transformation.

We remember that ARBK in its official communications has ruled that such transformation is not allowed with the Trade Society Law.

But for BQCH the Law for Banks is “stronger” than the law for Action Societys, even though the deputy director of ARBKA, Lebibe Haliti, had found such a transformation of the Ziraat bank is illegal.

According to the CQK, transformation has been initiated and led by them as regulatory authority, due to difficulties in overseeing a foreign branch, and that this change has been made to strengthen financial supervision and stability of the banking market in the country.

In the question of whether the CEC was aware of the ARBK's refusals and its internal communications citing the transformation as illegal, the CEC has estimated that there has been continued communication between relevant institutions.

“There have been inter-institutional communications and relevant interpretations of the prevailing legal provisions, which have enabled the implementation of cases under the legal framework and regulations in force. “, say by BQK A

According to the CEC, the Ziraat bank has operating licenses as well as the necessary legal capital, while with the effective new legal status, the process of adaptation to additional requirements will begin, making it equal to other banks operating in the country.

While the answers from the CEC try to justify the process as legitimate and in the interest of financial stability, they do not provide direct, clear answers and documented concrete questions such as whether there is a decision or an opinion written on this move, does the CQK have any documents that are binding on it? ARBK, has the conflict between the two laws been discussed officially, or has it become just a practical interpretation and the essential question, when and how specifically, did the new license and capital deposit occur?

Therefore, the CEC's answers contain more general excuses than a direct legal and procedural clarification, as required by Periscope.

No consulted document or written opinion was sent to them in their responses ARBKUE or the Ministry of Industry, Intervention and Trade (MINT), nor is it clear whether Ziraat Bank has completely completed the process of registration and licensing as a stock society in line with double legal requirements.

The BEC's response seems more like an attempt to legitimise a committed action than as a real transparency for citizens and institutions that have raised concerns on the issue.

The following are the complete explanations and answers of BQCH:

With regard to the issue that you have raised, we announce that the process of transforming from a branch of a foreign bank to a dependent subject (action society), namely, as the bank fully established in the country with applied requirements like for all other banks, is continuing and fully complying with the legal and regulatory framework in force. The following are the additional explanations raised on your questions:

Under Article 12 of the Law for Banks, requirements for the establishment of the dependent subject, the law gives the CEC exclusive right to ask the foreign bank to return from a branch to the dependent subject of the foreign bank. This, first of all, is considered that such an operation with a very reduced presence of management structures and demands coming out of the law for banks founded as branches of foreign banks, does not enable proper supervision as required with articles 7, 8 and 74 of the Law for BQ, and does not coincide with the BEC's strategic plan to preserve and further strengthen financial stability.

For knowledge, only Kosovo in the region had allowed and licensed the operation of banks as branches of foreign banks, which are not met in the practices of the region, or even wider (concepts that function mainly within the EU as a common internal market where banks founded in a country within the EU can operate through the establishment of branches in the other EU countries, with they subject themselves to the same central legislation and institutions). Therefore, the issue of turning from one branch to the dependent subject (action society) has been deemed appropriate and after receiving approvals from the supervisory authority in Turkey as required by our legislation, and subjecting it to normal procedures of change, where the CEC has made all necessary decisions under responsible legal structures.

As for the procedure, the bank, with the case of transformation as a subject, is obliged to change the form of business organisation by enrolling as an Actionary Society, as required with Article 3 and 21 of Law. 04/L-093. On the other hand, the Law for Banks, in Article 42 (Enformation of the Trade Society Law), stipulates that the provisions related to governance and ownership of the stock society, found in the Law on Trade Associations, which are not incompatible to this law, are also applied to banks, but this law [Law for Banks] prevails over the establishment of which provisions apply to banks”.

To address the issue of implementing applicable legislation for banks and commercial societies, there have been inter-institutional communications and respective interpretations of the ruling legal provisions, which have enabled the implementation of issues under the legal and regulatory framework in force. Therefore, the process has also been continued according to the legal and regulatory framework in force, while other operational and technical aspects are ongoing to relevant institutions and are conducted by the bank and its responsible bodies in full respect of the legal framework. The bank has legal operating licenses and capital necessary, while with effective new legal status, the process of adapting to additional regulatory requirements will also begin, making it equal to other banks operating in the country, and enabling capital, investment, foundation of separate governing bodies (the governing debt, committees, etc.) of the subject dependent as the special legal entities founded in Kosovo and activities in compliance with the development plan.

We consider that this move has contributed to the process of increasing financial stability, increasing that competitiveness, as well as higher regulatory requirements, with more effective supervision of activities and all of its management structures, including the approval of senior leaders from the CEC, and as a process has been consulted with the international partner institutions with which the CEC has co-operation. ”

Periscope will continue to follow this topic and seek concrete documents that prove the legal compatibility of this transformation.

Scandalous: The Turkish bank's illegal transformation Ziraat, bank lawyer Vjosa Osmani (DOKUMENT)