Contents Section I Introduction 1 DenizBank Financial Services Group 1 DenizBank’s Mission, Vision 2 Ordinary General Assembly Meeting Agenda 2 Dividend Distribution Proposal 3 Amendments to the Articles of Association 3 Changes in Shareholding Structure and Paid-in Capital 3 Shares Held by the Management 3 Ratings of DenizBank by International Rating Agencies 4 Compliance Opinion on the Annual Report 5 Financial Highlights 6 2010 at a Glance 8 DenizBank in Brief 9 Dexia in Brief 10 Message from the Chairman 14 Message from the CEO 19 Banking Services 36 Investment Banking and Brokerage Services 38 Leasing and Factoring Services 39 Pension and Insurance Services 40 Information Technology Services 42 Cultural Services Section II Management and Corporate Governance 44 Board of Directors 48 Executive Management 51 Auditors 51 Committees 52 Summary Report of Board of Directors to the General Assembly 53 Human Resources 54 Training 54 Related Party Transactions 55 Support Services 55 Donations Made During the Year 56 Report on DenizBank’s Compliance with Corporate Governance Principles Section III Financial Information and Risk Management 64 Statutory Auditors’ Report for 2010 65 Assessments of the Audit Committee 66 Internal Audit, Internal Control, Compliance and Risk Management Systems 67 Risk Management Policies 68 Assessment of Financial Position 69 Five-year Summary Financial Highlights Section IV Independent Audit Reports, Financial Statements and Notes 71 Consolidated Financial Statements as of December 31, 2010 with Independent Auditor’s Report 162 Directory * Unless otherwise noted, financial figures in this report are consolidated figures of DenizBank Inc. and her financial subsidiaries subject to consolidation. DenizBank Financial Services Group Annual Report 2010 DenizBank Financial Services Group Banking Services DenizBANK DenizBAnk AG (VıennA) CJSJ DEXıA BANK (MOSCOW) EURODeniz ıNTERNATıONAL BANKıNG UNıT (nıCOSıA) ınvestment Banking and Brokerage Services DenizYAtıRıM SECURıTıES EKSPRESıNVEST SECURıTıES DenizTÜREV SECURıTıES DenizıNVESTMENT TRUST DenizPORTFOLıO MANAGEMENT Leasing and Factoring Services DenizLEASıNG DenizFACTORıNG Pension and ınsurance Services DenizEMeklilik ınformation Technology Services ıNTERTECH Cultural Services DenizKÜLTÜR Other Services PUPA BANTAş DenizBank’s Mission DenizBank’s mission is to enhance shareholder value with her market position, image and corporate culture by employing a supermarket approach to financial services, thus ensuring satisfaction to shareholders, employees and customers. Vision DenizBank envisions becoming one of the largest five banks in Turkey and the foremost financial institution in the region defined as the Middle East, Caucasus, Balkans and CIS (Commonwealth of Independent States) countries through sustainable and profitable growth. 2 Section I ıntroduction Ordinary General Assembly Meeting Agenda 1. Opening and formation of the Board. 2. Authorizing the Board to sign the “Assembly meeting minutes” and “attendee’s list.” 3. Making the decision about reading, discussion and approval of Balance Sheet and Profit and Loss Statement for fiscal year 2010; Report of Independent Auditor prepared by DELOITTE-DRT Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş., as a result of independent audit proceedings of the fiscal year 2010; and Report of Board of Directors and Statutory Auditors’ Report. 4. Making decisions about the distribution of 2010 profit. 5. Accepting the resignation and release from liability of Board member Fikret ARABACI and approving the nomination of Hasan Hüseyin UYAR as his successor to complete the remaining term of the vacated position. 6. Discharging the Board of Directors and Statutory Auditors from the activities concerning the fiscal year 2010. 7. Determining the number of the members comprising the Board of Directors and selecting the new members of the Board of Directors as well as determining the length of their term in office. 8. Election of the statutory auditors and deciding on the length of their term in office. 9. Making decisions about the compensation and salaries of members of the Board of Directors and the Statutory Auditors. 10. Submitting the donations made for the information of shareholders. 11. Granting the permissions stated in Article 334 and 335 of the Turkish Commercial Code to the members of the Board of Directors, on the condition that matters subject to permission do not violate the restrictions stipulated by the Banking Law No. 5411. 12. Making decisions about the issuance of bonds, profit share certificates, commercial paper and debenture bonds. 13. Wishes and requests. DENİZBANK A.Ş. Dividend Distribution Proposal At its meeting No. 2011/10 held on March 1 2011, the Board of Directors resolved to propose for the General Assembly’s approval that the entire net profit of TL 457,540,641.56 that accrued, based on the Bank’s Balance Sheet for 2010, not be distributed to the shareholders; 5% of the net profit and 2010’s real estate sales profit of TL 855,372.92 which was reserved to benefit from the exception stated in Article 5/1 of Corporate Tax, within the Legal Reserves Kept in the Company Account, or TL - 22,877,032.08 be set aside as Legal Reserve pursuant to Article 466/1 of the Turkish Commercial Code; and the remaining TL 433,808,236.56 be set aside as Extraordinary Reserve. Respectfully yours, DENİZBANK A.Ş. Board of Directors DenizBank Financial Services Group Annual Report 2010 3 Amendments to the Articles of Association Shares Held by the Management The Bank’s General Assembly, at her meeting DenizBank’s President and CEO Hakan Ateş and Board Members Cem Bodur, Ayfer Yılmaz and held on March 26, 2010, resolved to amend Hacı Ahmet Kılıçoğlu each owns 11,327 shares, corresponding to 0.000002% of the share Articles 3, 4, 7, 8, 17, 19, 22, 25, 27, capital. 28 and 38 of the Articles of Association. The amended articles of the Articles of Shareholding Structure of DenizBank* Association were registered on March 30, Shareholders Nominal Value (TL) % of Shares 2010. Dexia Participation Belgique SA 714,945,274 99.84 Changes in Shareholding Structure and M. Cem Bodur 11.33 0.00 Paid-in Capital Hakan Ateş 11.33 0.00 DenizBank’s shareholding structure and the Ayfer Yılmaz 11.33 0.00 shareholding structure of real person(s) Hacı Ahmet Kılıçoğlu 11.33 0.00 as ultimate controlling shareholder(s) are presented in the table below. DenizBank’s Publicly Traded 1,154,681 0.16 shareholding structure does not contain any Total 716,100,000 100.00 cross-shareholdings. * as of December 31, 2010 Ratings of DenizBank by International Rating Agencies Moody’s Investors Service* Fitch Ratings* Long-term Foreign Currency Deposits Ba3/Positive Long-term Foreign Currency BBB-/Positive Short-term Foreign Currency Deposits NP Short-term Foreign Currency F3 Long-term Local Currency Deposits Baa2 Long-term Local Currency BBB/Positive Short-term Local Currency Deposits Prime-2 Short-term Local Currency F3 Financial Strength C- Individual C Outlook Stable Support 2 * as of 07.10.2010 National AAA (tur) Outlook Stable * as of 02.12.2010 4 Section I ıntroduction Compliance Opinion on the Annual Report CONVENIENCE TRANSLATION OF THE REPORT ON COMPLIANCE OF ANNUAL REPORT ORIGINALLY PREPARED AND ISSUED IN TURKISH Compliance Opinion To the General Assembly of DenizBank A.Ş.: We have audited the accuracy and compliance of the financial information in the accompanying annual report of DenizBank A.Ş. with the audit report issued as of December 31, 2010. The annual report is the responsibility of the Bank’s management. Our responsibility, as independent auditors, is to express an opinion on the audited annual report based on the compliance of financial information provided in the annual report with the audited financial statements and explanatory notes. Our audit was performed in accordance with the accounting standards and principles and procedures of preparing and issuing annual reports as set out by the Banking Act No: 5411. Those standards require that we plan and perform our audit to obtain reasonable assurance whether the annual report is free from material misstatement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. In our opinion, the financial information provided in the accompanying annual report presents fairly, in all material respects, the financial position of DenizBank A.Ş. as of December 31, 2010 in accordance with the prevailing accounting principles and standards set out as per the Article 40 of the Banking Act No: 5411. The financial information provided in the annual report is in compliance with the audited financial statements and explanatory notes, and also includes the summary management report and our audit opinion on these financial statements. DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş. Member of DELOITTE TOUCHE TOHMATSU LIMITED Hasan Kılıç Partner Istanbul, March 1, 2011 DenizBank Financial Services Group Annual Report 2010 5 Financial Highlights 34% 121% ınCREASE ın DEPOSıtS LOANS/DEPOSıTS CONSolıDATED Total Assets (TL millions) Loans* (TL millions) Deposits** (TL millions) 19,713 33,853 23,790 18,558 25,943 14,701 17,235 24,222 11,834 2010 2009 2008 2010 2009 2008 2010 2009 2008 Shareholders’ Equity (TL millions) Net Profit (TL millions) Capital Adequacy Ratio (%) 616 605 16.72 3,659 16.06 15.70 2,968 342 2,287 2010 2009 2008 2010 2009 2008 2010 2009 2008 UNCONSolıDATED Total Assets (TL millions) Loans (TL millions) Deposits**