ILLER BANK INC. ILLER BANK 2019 ANNUAL REPORT ANNUAL www.ilbank.gov.tr ANNUAL REPORT ANNUAL The Finance Bank should be established for the public services of the municipalities in the construction and installation of the cities. Contents SECTION ONE SECTION TWO SECTION THREE SECTION FOUR Presentation Bank’s Annual Activities Management and Corporate Financial Information and Risk 5 Agenda of the Ordinary General 17 2019 Investment and Financing Program Governance Practices Management Assembly Meeting 17 Works carried out with 100% Credits Financed by Bank Equity. 6 Corporate Profile 18 Bank’s 2019 Annual Activities 40 Board of Directors 53 Audit Board Report 8 Message From the Minister of 20 Project to Support the Infrastructure of Municipalities (BELDES) 42 Audit Committee 54 Audit Committee’s Assessment Of The Operation Of The Environment and Urbanization 20 Water and Sewer Systems Infrastructure Project (SUKAP) 43 Information On Audit Committee Internal Control, Internal Audit, And Risk Management 10 Message from the Chairman 21 Works Being Conducted With Appropriations Made From the Bank’s Profits 44 Information on General Manager Systems and Its Statement Concerning Activities in Year 2019 11 Message from the General Manager 22 Ministry of Environment and Urbanization Ministry with 45 Information On Internal Systems Unit Directors 58 Independent Audit Report 12 Our Corporate Message Works made under the Protocols 46 Organizational Chart Of Iller Bank 63 Iller Bank Non-Consolidated Financial Report for the Year 14 Summary Financial Results 24 Resource Development Activities and Urban Transformation Projects 48 Summary Board of Directors Report Ended on 31 December 2019 16 Capital and Partnership Structure 26 Profile of Credits Provided out of the Equity of Iller Bank 50 Compliance Opinion On The Annual Report 152 Financial Information on Asset, Liability and Profitability 27 Subsidiaries 52 Human Resources Practices Structure as of December 31, 2019 28 Relations with International Financial Institutions 52 Transactions The Bank Enters Into With Members 157 Risk Management Policies Implemented Per Risk Type 32 Categorical Breakdown of Works Completed in 2020 Of Its Own Risk Group 159 Information on Ratings 33 Statutory Shares Transferred to Local Governments 52 Activities For Which Support Services Are Outsourced 160 Summary Financial Information For The Period 2015-2019 34 Debts Subjected to Reconciliation 165 Information On Works Completed By The Bank in 2019 35 Debts not Subjected to Reconciliation 184 Contact Information 36 Other Activities Carried Out By Ilbank 38 Research-Development Activities for New Services and Operations 4 İLLER BANKASI 2018 FAALİYET RAPORU Agenda of the Ordinary General Assembly Meeting Date of General Assembly Meeting July 9, 2020, Thursday at 14: 00 Venue Sheraton Ankara Hotel & Convention Center Noktalı Street No: 1 Kavaklıdere, Çankaya/ANKARA Agenda of the General Assembly Meeting 1. Opening & moment of silence, 2. Formation of the General Assembly Council and the authorization of the Council Chair to sign the Ordinary General Assembly Meeting minutes, 3. Reading, deliberating and approving the Board of Directors’ Report and the Statutory Auditors’ Report, 4. Reading, reviewing, deliberating and approving the Balance Sheet and Profit/Loss accounts having undergone independent audits, for year 2019, 5. Individual releases of each of the company’s directors and statutory auditors 6. Determining the remuneration to be paid to the members of the Board of Directors and Statutory Auditors 7. Authorizing the Board of Directors members as per Articles 395 and 396 of the Turkish Commercial Code 8. Deciding on the cancellation of uncollected Bank receivables as required by Article 6 of the Bank Law, 9. Submission of the Amendment Text of Iller Bank Articles of Association approved by the Banking Regulation and Supervision Agency and the Ministry of Commerce to the approval of the General Assembly, 10. Submission of the Internal Directive Amendment Text prepared in accordance with Article 419 of the Turkish Commercial Code for the approval of the General Assembly, 11. Approval of the Independent Audit Firm that will perform the Independent Audit of the Bank for 2020-2021-2022 in accordance with the relevant regulation of the Banking Regulation and Supervision Agency, 12. Petitions and Suggestions 13. Closing IILLER BANK ANNUAL REPORT 2019 5 Corporate Profile Corporate Profile On 11 June 1933 during the presidency of Mustafa Kemal Atatürk, a financial institution called “Municipalities Bank” (Belediyeler Bankası) Article 3 of the Law no. 6107 was incorporated under Law no. 2301 with TRL 15 million capital in order governing Iller Bank sets forth that; to foster municipal prosperity and of providing credit support to such administrations as lacked financial resources and means. One of the Republic’s oldest established the villages are excluded from this aid.<br> and world conditions by changing the fields institutions, being founded in 1933 as the of activity, organizational structure, per- Within this framework, with the enactment Municipalities Bank, Iller Bank is a proud sonnel policy and employment of the Bank, of the Law numbered 4759, which was ac- and unique institution in the world’s history cepted on 13 June 1945 and published in the and to become an institution that produces of development banking. Official Gazette on 23.06.1945; The area more effective and efficient services. With In accordance with the Establishment Law, of ​​activity has been expanded to include all these needs and obligations, the Bank In order to achieve these was restructured with a legal arrangement; the structure of the Bank of Municipalities all local governments, including provincial summarized objectives, Iller Bank may; has been reorganized due to the fact that it special administrations, municipalities and The Law on Iller Bank Joint Stock Company operates exclusively for municipalities, the villages, and a new legal status has been numbered 6107 was accepted by the Parlia- Extend any and all types of short-, medium-, mentations in order to obtain funds for the capital of the establishment has not been created by expanding both the name of the ment on January 26, 2011 and published in and long-term cash and non-cash loans to its Bank, provided that it shall not incur any de- able to meet the increasing need for loans bank and its duties, powers and responsibi- the Official Gazette dated February 8, 2011. shareholders; bts or enter into any conditional obligation in in parallel with the rapid population growth lities. In parallel with the changing econo- Thus, the Bank was transformed into “Joint doing so, As constitutionally and statutorily and urbanization, as well as the villages mic and social conditions of the world and Stock Company” status and was renamed Conduct, or arrange for the conduct of, rese- prescribed organizations, local governments that have been excluded from this aid and our country; It is aimed to adapt the country as “İller Bankası Joint Stock Company”. arch, project development and consultancy are the cradle of democracy and have an im- services in its fields of activity, and provide portant place in, and contribution to, the in- technical assistance in the same, Lead the culcation of democratic ideals and principles way in the formation of companies as a in society. bank, and transfer control of them, Act as an insurance agent, Iller Bank is a unique institution, which has no exact analogues anywhere else. Having a Open branches and representative offices in special place in the annals of development Turkey and abroad, provided that necessary banking by virtue of its distinctive structu- approvals are obtained, Cooperate with do- re, Iller Bank has been providing local go- mestic and/or foreign financial institutions, vernments with financial support as well as become a member of national and interna- The objectives of Iller Bank are; transforming that support into investment tional organizations of which they are mem- ever since the day it was founded. To meet the financing needs of special bers, It can obtain resources from domestic provincial authorities, municipalities, and international financial institutions, mo- Farsightedness and the Bank since its foun- and their affiliated organizations, and ney and capital markets, and any kinds of dation, reflecting the dynamism of the ser- of local administrative associations of funds. vice concept, “Turkey’s Constructive Power” which only these may be members, continues with enthusiasm on the day of its Obtain resources from domestic and interna- establishment as a service. To develop projects concerning locall- tional financial institutions, money and capi- y-provided common services for the pe- tal markets, and any and all funds, Iller Bank never ceases its efforts to execute ople dwelling within the boundaries of its duties, responsibilities, and powers befo- Engage in any and all kinds of development such administrations, re local governments, with an organization and investment banking transactions that based on 17 Departments as well as Legal To provide such administrations with will help it achieve its objectives; Counsel, R&D Board, Board of Directors, Au- consultancy services and assistance on Develop projects and construct special proje- dit Committee Divisions, Secretariat, Media urban projects of a technical nature and cts and urban infrastructure projects deman- and Public Relations Division, and Recrea- in the conduct of