Turkish Central Bank agrees to early profit distribution
The Central Bank held its extraordinary general assembly meeting on Jan. 18 and approved an early transfer of its 2018 profit to the shareholders.
“An amendment was made to the Articles of Association of the Bank, allowing the General Assembly to convene within three months following the end of the respective accounting period each year,” the Central Bank said in a statement issued after the assembly meeting.
“An advance dividend was decided to be paid, and accordingly, the distribution of an amount totaling 33.7 billion Turkish Liras [$6.3billion] to shareholders has started in line with the related legislation,” it added.
Typically, the Central Bank transfers the Treasury’s share from profit in April.
However, the bank had announced that its annual general assembly would convene on Jan. 18.
The Central Bank’s major shareholder is the country’s Treasury and Finance Ministry.
The ministry holds a 55.12 percent stake in the Central Bank, according to information on the bank’s website.
This early payment will definitely boost the coffers of the Treasury and Finance Ministry.
The ministry faces domestic debt redemptions of 6.4 billion liras in January, a hefty 22.7 billion liras in February and another 15.3 billion liras in March, according to the ministry’s borrowing strategy announced on Dec. 31.
The Central Bank did not elaborate on the sum it will transfer to the Treasury and Finance Ministry.
In 2017, the Central Bank’s profit was 18.4 billion liras, up from 9.55 billion in 2016.
In 2017, the Central Bank transferred some 12 billion liras to the Treasury out of the profit it made that year and in 2016 it transferred some 6.4 billion Turkish liras to the Treasury.
“We had previously estimated the profit to be transferred to the Treasury at around 20 billion Turkish Liras [$3.7 billion]. However, it emerged that the figure would be at around 37 billion liras. This is much higher than we had projected in the budget,” Treasury and Finance Minister Berat Albayrak had said in a speech on Jan. 9.
“The source from the Central Bank will be used to improve the flow of liquidity to the markets under better cash management. This will allow the government to make its payments in a faster fashion under the current economic conditions,” Albayrak said at that time.
Responding to a question from a shareholder at the assembly meeting on why the assembly date was moved forward, Central Bank Governor Murat Çetinkaya noted that the new commercial code required joint stock companies to hold their general assembly within three months after the end of the operating period.
“Thus, the general assembly meeting was held in line with the requirements of the new commercial code,” Çetinkaya said.