[Federal Register Volume 81, Number 70 (Tuesday, April 12, 2016)]
[Notices]
[Pages 21609-21611]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-08298]



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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32066; 812-14514]


T[uuml]rkiye Sinai Kalkinma Bankasi A.[Scedil].; Notice of 
Application

April 6, 2016.
AGENCY: Securities and Exchange Commission (the ``Commission'').

ACTION: Notice of application for an order under section 6(c) of the 
Investment Company Act of 1940 (``Act'') for an exemption from all 
provisions of the Act.

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SUMMARY: 
    Applicant: T[uuml]rkiye Sinai Kalkinma Bankasi A.[Scedil]. 
(``Applicant'').
    Summary of Application: Applicant, a banking institution organized 
as a public joint stock company of unlimited duration under the laws of 
the Republic of Turkey (``Turkey'') requests an order exempting it from 
all provisions of the Act in connection with the offer and sale of its 
debt securities in the United States.
    Filing Dates: The application was filed on July 14, 2015, and 
amended on November 25, 2015 and March 14, 2016.
    Hearing or Notification of Hearing: An order granting the 
application will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicant with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on May 2, 2016, and should be accompanied by proof of service 
on applicant, in the form of an affidavit or, for lawyers, a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request, and the issues 
contested. Persons who wish to be notified of a hearing may request 
notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street NE., Washington, DC 20549-1090. Applicant, Meclis-i Mebusan 
Caddesi No. 81 34427 F[inodot]nd[inodot]kl[inodot], Istanbul, Turkey.

FOR FURTHER INFORMATION CONTACT: Elizabeth G. Miller, Senior Counsel, 
at (202) 551-8707, or Holly Hunter-Ceci, Branch Chief, at (202) 551-
6825 (Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site by searching for the file number, or applicant 
using the Company name box, at http://www.sec.gov/search/search.htm or 
by calling (202) 551-8090.

Applicant's Representations

    1. Applicant is a banking institution organized as a public joint 
stock company of unlimited duration under the laws of Turkey. Applicant 
was established on May 31, 1950 as a ``Development and Investment 
Bank'' in accordance with Turkish Banking Law, No. 5411. As mandated by 
Turkish law, Applicant's principal activity is promotion of Turkish 
economic development through providing long-term funding for domestic 
and international investment by Turkish companies, primarily through 
loans denominated in foreign currencies. The Applicant's mandate as a 
``Development and Investment Bank'' is to extend medium- to long-term 
financing to business enterprises, to assist domestic and foreign 
capital owners to finance the development of new businesses in Turkey, 
and to contribute to improvements in Turkish capital markets. A 
majority of Applicant's assets, together with its consolidated 
financial subsidiaries (the ``Group''), currently consist of loans and 
leasing receivables net of allowance for possible losses and a 
securities portfolio (of which 91.7% constituted Turkish government 
securities). Since such securities and loans could be considered 
``investment securities'' within the meaning of section 3(a)(1)(C) of 
the Act, Applicant may be considered an investment company, and it 
requests an exemption from all provisions of the Act.
    2. As a Turkish development and industrial bank, Applicant (i) 
supports private sector, productive investments in the Turkish 
industrial and service sectors; (ii) assists with the financing and 
development of new businesses in Turkey; and (iii) contributes to the 
improvement of Turkish capital markets. Applicant may engage, inter 
alia, in the following activities in pursuit of its development banking 
activities: (i) Provision of short-, medium- and long-term loan 
financing against pledges, mortgages, or other security by way of open 
credits; financing of existing and new industrial enterprises; (iii) 
performance of capital market or money market transactions in Turkey 
and abroad in cooperation with national or international institutions; 
(iv) financial leasing transactions and other similar financial 
transactions and issuance of guarantees; and (v) acceptance, 
establishment, and termination of mortgages. Applicant is authorized to 
engage in the following standard commercial and investment banking 
activities: (i) ``Activities of banks (including participation banks, 
saving banks, credit unions, etc.; except central banks and investment 
banks)''; (ii) ``Investment banking activities''; (iii) ``Activities 
for security incomes on own account (dividends, bank interest, 
participation earnings, remuneration, etc.)''; (iv) ``Finance 
leasing''; (v) ``Fund management activities bas[ed] on a fee or 
contract basis (portfolio management, mutual fund management, pension 
fund management, etc.)''; and (vi) ``Activities auxiliary to investment 
banking (mergers and acquisitions activities, business financing and 
venture capital financing activities, etc.).''
    3. As of December 31, 2015, Applicant is privately controlled, with 
50.3% of its shares held directly or indirectly by T[uuml]rkiye 
[Idot][scedil] Bankas[inodot] A.[Scedil]. Group and 8.4% by 
T[uuml]rkiye Vak[inodot]flar Bankas[inodot] T.A.O. As of the same date, 
39.3% of Applicant's shares were publicly traded on the Borsa 
[Idot]stanbul A.[Scedil]. (``BIST'') (of which 59.3% were held by 
foreign investors), with the remaining shares owned by various other 
institutional investors. A significant portion of the Group's 
obligations is subject to a guarantee by the Turkish Treasury.
    4. Applicant is subject to a regulatory regime substantially 
equivalent to that of commercial banks in Turkey, including oversight 
and supervision by the Turkish Banking Regulation and Supervision 
Agency (the ``BRSA''), the Central Bank of Turkey (the ``Central 
Bank''), the Capital Markets Board of Turkey, the BIST, the Turkish 
Banks Association, and the Financial Crimes Investigation Board, 
including a full range of banking, competition, antitrust, anti-money 
laundering, sanctions and other laws and regulations designed to 
maintain the safety and financial soundness of Turkish banks, ensure 
their compliance with economic and other obligations, and limit their 
exposure to risk. Applicant is subject to extensive oversight, 
supervision, and regulation by the Turkish government on the same terms 
as other large commercial banks, including in accordance with the Basel 
III framework and international capital and liquidity standards. The 
Turkish Treasury guarantees a significant portion of Applicant's long-
term funding from development financial institutions and appoints a 
representative to Applicant's Board of Directors. Applicant's Board of 
Directors and management have implemented comprehensive policies and 
procedures governing Applicant's banking operations.

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    5. As described more fully in the application, while Applicant 
performs many of the same functions as Turkish commercial banks and is 
subject to extensive supervision and regulation by the Turkish 
government, Applicant is prohibited from accepting deposits from the 
public. The scope of Applicant's operations is more limited than that 
of Turkish commercial banks owing to its specific objectives as a 
development and investment bank.
    6. Development financial institutions (``DFIs'') are Applicant's 
primary source of funding; however, as DFI funding is typically 
received in the form of ``tied loans'' limited to a specific purpose or 
sector within Turkey, Applicant plans to offer and sell debt securities 
to supplement its funding base. Accordingly, Applicant proposes to 
issue and sell its debt securities in the United States from time to 
time, including under its Global Medium Term Note Program. Applicant 
intends to use the proceeds of any such sale of securities as an 
additional source of funding for its general purposes and in connection 
with its development and investment banking mandate. The proceeds of 
any such sale of debt securities will be used by Applicant as an 
additional source of funding for its general corporate purposes and in 
connection with its development and investment banking mandate. 
Specifically, Applicant intends to use any such debt security funding 
to extend loans to public-private partnerships and other socially 
responsible investment projects, including health, education, and 
renewable energy projects, that are ineligible for DFI tied loan 
funding.

Applicant's Legal Analysis

    1. Section 3(a)(1)(C) of the Act defines an ``investment company'' 
to include any issuer engaged in the business of investing, 
reinvesting, owning, holding or trading in securities, and that owns or 
proposes to acquire investment securities having a value exceeding 40% 
of the issuer's total assets. Section 3(a)(2) of the Act defines 
``investment securities'' to include all securities except Government 
securities, securities issued by employees' securities companies, and 
securities issued by majority-owned subsidiaries of the owner which (a) 
are not investment companies, and (b) are not relying on the exclusions 
from the definition of investment company in section 3(c)(1) or 3(c)(7) 
of the Act.
    2. Applicant states that as of December 31, 2015, the Group had 
total assets of TL21.4 billion, of which loans and leasing receivables 
net of allowance for possible losses accounted for 63.8% and the 
Group's securities portfolio for 18.0% (of which 91.7% constituted 
Turkish government securities). Such loans and securities could be 
construed as ``investment securities'' within the meaning of Section 
3(a)(1)(C) of the Act, thus potentially rendering Applicant a prima 
facie ``investment company.'' As a result, Applicant states that it 
could be deemed to be an ``investment company'' under section 
3(a)(1)(C) of the Act.
    3. Section 6(c) of the Act provides, in relevant part, that the 
Commission, by order upon application, may conditionally or 
unconditionally exempt any person, security, or transaction from any 
provision of the Act, if and to the extent necessary or appropriate in 
the public interest and consistent with the protection of investors and 
the purposes fairly intended by the policy and provisions of the Act.
    4. Rule 3a-6 under the Act excludes foreign banks from the 
definition of an investment company under the Act. A ``foreign bank'' 
is defined in the rule to include a banking institution ``engaged 
substantially in commercial banking activity'' which in turn is defined 
to include ``extending commercial and other types of credit, and 
accepting demand and other types of deposits.'' Applicant represents 
that it is the functional equivalent of a ``foreign bank'' insofar as 
it (i) offers financial services and issues financial products similar 
to those offered and issued by other Turkish commercial banks and (ii) 
is subject to extensive oversight, supervision, and regulation as a 
bank by the Turkish government. However, by Turkish law, Applicant is 
prohibited from accepting deposits. Therefore, Applicant states that 
there is uncertainty as to whether the Rule 3a-6 exemption would be 
deemed to apply.
    5. Applicant also believes that the rationale of Congress and the 
Commission in promulgating rules under the Act in exempting foreign 
financial institutions applies to Applicant. Applicant represents that 
it is subject to extensive oversight, supervision and regulation by the 
Turkish Government to an equivalent extent as applies to Turkish 
commercial banks. Applicant further represents that it is subject to a 
more direct form of government oversight and supervision than 
commercial banks in Turkey owing to representation of the Turkish 
Treasury on the Applicant's board of Directors and the Turkish 
government's guarantee of certain of the Group's liabilities. Applicant 
also represents that the Turkish government guarantees a significant 
portion of the Group's obligation and the Turkish Treasury appoints a 
representative to Applicant's Board of Directors. Accordingly, 
Applicant represents that its operations do not lend themselves to the 
abuses against which the Act is directed, and states that it believes 
it satisfies the standards for relief under section 6(c) of the Act.

Applicant's Conditions

    Applicant agrees that the order granting the requested relief will 
be subject to the following conditions:
    1. In connection with any offering by Applicant of its debt 
securities in the United States, Applicant will appoint an agent in the 
United States to accept service of process in any suit, action, or 
proceeding brought with respect to such debt securities instituted in 
any state or federal court in the Borough of Manhattan, The City of New 
York, New York. Applicant will expressly submit to the jurisdiction of 
New York State and U.S. federal courts sitting in the Borough of 
Manhattan, The City of New York, New York, with respect to any such 
suit, action, or proceeding. Applicant also will waive the defense of 
forum non conveniens to the maintenance of any such action or 
proceeding. Such appointment of an agent to accept service of process 
and such consent to jurisdiction shall be irrevocable until all amounts 
due and to become due in respect thereof have been paid. No such 
submission to jurisdiction or appointment of agent for service of 
process shall affect the right of a holder of any such security to 
bring suit in any court which shall have jurisdiction over Applicant by 
virtue of the offer and sale of such securities or otherwise.
    2. Applicant undertakes to provide to any person to which it offers 
its debt securities in the United States disclosure documents that are 
at least so comprehensive in their description of Applicant and its 
business as those which may be used by comparable U.S. issuers in 
similar U.S. offerings of such securities and that contain the latest 
available audited annual financial statements (and, if available, 
reviewed interim financial statements) of the Group. Applicant further 
undertakes to ensure that any underwriter or dealer through whom it 
makes such offers will provide such disclosure documents to each person 
to whom such offers are made prior to any sale of securities to such 
offeree. Such documents will be updated promptly to reflect any 
material change in the Group's financial status and shall be at least 
as comprehensive as offering memoranda customarily used in similar 
offerings in the United States. Any offering of Applicant's securities 
in

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the United States shall comply with applicable U.S. securities and 
anti-fraud laws and regulations.
    3. Applicant shall rely upon the order so long as (i) its 
activities conform in all material respects to the activities described 
in this Application and (ii) Applicant continues to be regulated by the 
BRSA, the Central Bank, or other applicable Turkish regulatory 
authorities as a development and investment bank as described in the 
application.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-08298 Filed 4-11-16; 8:45 am]
 BILLING CODE 8011-01-P