Financial Institutions
Capital Adequacy, Consolidated Supervision, Prudential Approvals at Every Material Transaction
Financial institutions operate within a regulatory architecture unlike any other industry — capital adequacy, consolidated supervision, recovery and resolution planning, prudential authority approvals at every material transaction. The sector spans commercial and investment banks, participation banks, development institutions, insurance and reinsurance companies, asset managers, private equity firms, pension funds, family offices, payment institutions, crypto-asset service providers, brokerage firms and non-bank financial intermediaries — each subject to distinct prudential frameworks and licensing regimes.
Mermeroglu Legal advises banks, insurance companies, asset managers, payment institutions and non-bank financial intermediaries across the regulatory, transactional and dispute dimensions of their business, coordinating with applicable foreign law through experienced partners. In Türkiye, the sector operates under a multi-regulator framework: BDDK under the Banking Law (Law No. 5411), SPK under the Capital Markets Law (Law No. 6362), SDDK under the Insurance Law (Law No. 5684) and the Central Bank under Law No. 1211 — with crypto-asset service provision brought within SPK regulation under 2024 amendments.
Legal Framework
Three Foundational Dimensions
The Prudential Framework
Financial institutions are subject to prudential regulation that is structurally different from other forms of commercial regulation: capital adequacy requirements calculated on risk-weighted assets, liquidity coverage ratios, leverage constraints, large exposure limits and related-party transaction rules — all designed to protect depositors, policyholders and systemic stability. In Türkiye, BDDK implements Basel III and IV standards through its own regulations. Any transaction involving a financial institution — an acquisition, a capital raise, a product launch — requires an assessment of how the prudential framework constrains or shapes the transaction structure. The prudential response of the supervisor is often determinative.
The Licensing Architecture
Each category of financial institution requires a distinct licence that authorises specific activities and imposes corresponding obligations. Bank licences, insurance authorisations, portfolio management company licences, payment institution authorisations and the newly regulated crypto-asset service provider licences each carry their own capital thresholds, governance requirements, fit-and-proper assessments and ongoing reporting obligations. Foreign financial institutions seeking to enter the Turkish market face an additional layer of regulatory assessment. A qualifying holding approval — required whenever a party acquires or increases a stake above specified thresholds — involves BDDK discretion that operates outside standard transaction timetables and must be built into deal structures from the outset.
The Regulatory Transaction
Most matters that initially present as transactional — an acquisition of a bank, a product launch, a non-performing loan portfolio sale — ultimately turn on the response of the relevant supervisor. Financial institution mandates therefore engage the prudential law of the institution's home jurisdiction, the law of any host jurisdiction in which it operates, and the substantive law governing the underlying transactions. A cross-border syndicated facility may simultaneously face Turkish banking regulation for the Turkish participant, English law for the facility documentation, and US sanctions exposure for USD-denominated payments. Our approach is to engage regulatory analysis at the start of each mandate, rather than as a clearance step at the end.
Sub-Sectors
Commercial & Investment Banking
Legal advisory for deposit-taking institutions and investment banks — covering BDDK licensing and regulatory compliance, capital adequacy, structured finance and capital markets transactions, syndicated lending, M&A advisory mandates, related-party transaction compliance and regulatory enforcement matters for Turkish and foreign banks operating in Türkiye.
Participation (Islamic) Banking
Legal support for participation banks operating under shariah-compliant frameworks — covering murabaha, ijara, sukuk and other Islamic financial structures, participation banking regulatory compliance under BDDK, AAOIFI-aligned product documentation and the legal structuring of shariah-compliant financing arrangements for corporate and project finance clients.
Insurance & Reinsurance
Legal support for life and non-life insurers, reinsurers and specialty lines including marine, aviation and political risk — covering SDDK licensing, policy documentation and product compliance, reinsurance treaty arrangements, claims dispute resolution, corporate governance obligations and the regulatory framework for insurance operations under Law No. 5684.
Asset Management & Funds
Advisory for portfolio management companies, fund managers, UCITS and alternative fund structures and Turkish gayrimenkul yatırım fonları — covering SPK licensing, mutual fund and investment trust establishment, fund governance and documentation, investor reporting obligations and cross-border fund structuring for domestic and international investment managers.
Private Equity & Venture Capital
Legal support for private equity general partners, venture capital firms and growth equity investors active in Turkish and regional markets — covering fund structuring, limited partnership documentation, portfolio company acquisitions, co-investment arrangements, management incentive plans and exit transactions through trade sales, secondary buyouts or public listings.
Pension Funds & Family Offices
Legal advisory for public and private pension scheme administration, individual pension systems (BES) and occupational arrangements, alongside single and multi-family offices — covering investment structure design, BES regulatory compliance, succession and estate planning structures, real estate and alternative asset transactions, and governance frameworks.
Payment Services & Crypto-Asset Providers
Legal advisory for payment institutions, electronic money issuers, embedded payment service arrangements and crypto-asset trading platforms — covering licensing under the Payment Services Law and 2024 SPK amendments, custody service structuring, token issuance frameworks, AML/CFT compliance and the regulatory framework for digital asset service provision in Türkiye.
Brokerage & Securities Houses
Legal support for CMB-licensed brokerage and investment firms — covering SPK licensing, Borsa İstanbul membership compliance, client agreement documentation, market conduct obligations, custody and settlement arrangements, suitability requirements and regulatory enforcement matters for securities dealers and market makers operating in Turkish and international capital markets.
Practice Intersections
Practice Areas Engaged in This Sector
Financial institutions sector mandates typically engage several practice areas simultaneously. The principal intersections are set out below.
- Banking & Finance — banking regulation, licensing, prudential compliance, lending and structured finance.
- Capital Markets — equity and debt issuance, fund formation, market making and SPK regulatory compliance.
- Mergers & Acquisitions — acquisitions of financial institutions, qualifying holding approvals and minority investments.
- Foreign Direct Investment & Market Entry — entry of foreign banks, insurers and asset managers into the Turkish market and structuring of cross-border financial operations.
- White-Collar Defense & Transnational Crimes — AML/CFT compliance, MASAK proceedings and defence in regulatory enforcement actions.
- Debt Recovery & Enforcement — non-performing loan portfolio transactions, distressed lender situations and recovery enforcement.
- Data Protection & Technology Law — financial data, payments data, open banking implementation and cybersecurity compliance for financial services.
- Tax & Cross-Border Structuring — financial institution tax structuring, fund domiciliation and cross-border product taxation.
- International Arbitration & Disputes — financial contract disputes, mis-selling claims and regulatory enforcement defence.
- Sustainability Finance & ESG — green bond issuance, sustainability-linked lending and ESG-aligned product development.
Regional Reach
Regional Market Profiles
The global financial services industry reflects substantial regional concentration of capital and supervisory architecture. Global banking sector assets exceed 170 trillion United States dollars, insurance premium volumes exceed seven trillion dollars annually and global assets under management exceed 100 trillion dollars. Mermeroglu Legal advises financial institutions engaging the legal and regulatory frameworks of the following regions and jurisdictions:
The MENA region is the principal global market for Islamic finance, with sukuk issuance and shariah-compliant banking representing significant transaction flows. The Dubai International Financial Centre, Abu Dhabi Global Market, Saudi Capital Market Authority framework and Qatar Financial Centre operate as international financial centres with English-law-based regulatory frameworks.
For detailed advice on jurisdictions not listed above — including emerging financial regulatory regimes, country-specific licensing procedures or jurisdiction-specific prudential frameworks — please direct your enquiry through the firm's contact channels.
Standards & Instruments
Principal International Instruments
Financial institutions engage a layered framework of international standards, regulatory accords and instruments addressing prudential supervision, AML, financial market infrastructure and dispute resolution. The most operationally significant include:
Basel Committee Standards (Basel III / IV)
Internationally agreed standards on capital adequacy, liquidity and prudential supervision issued by the Basel Committee on Banking Supervision. While not legally binding instruments, these standards form the basis of domestic prudential regulation across major economies and are implemented by Türkiye through BDDK regulation — shaping lending economics, capital planning and transaction structuring for Turkish banks.
Financial Action Task Force (FATF) Recommendations
International standards on anti-money laundering, counter-financing of terrorism and proliferation financing. Türkiye was on the FATF grey list between 2021 and 2024 and was removed following implementation of enhanced AML measures. FATF recommendations are implemented domestically through Law No. 5549 and MASAK regulation, imposing substantial compliance obligations on all financial institutions.
EU Banking Union Framework
Although Türkiye is not a Member State, the Banking Union framework — including the Capital Requirements Regulation, the Bank Recovery and Resolution Directive and the Single Resolution Mechanism — provides the principal reference framework for prudential supervision of European banking activity relevant to Turkish institutions operating in or with European markets. London and Frankfurt remain the principal European financial centres.
IOSCO Principles of Securities Regulation
International standards on securities regulation issued by the International Organisation of Securities Commissions. These principles are implemented domestically through the Capital Markets Law and SPK regulation — governing the conduct of portfolio managers, investment advisors, brokerage firms and market infrastructure providers operating in Turkish capital markets.
ISDA Master Agreements
The International Swaps and Derivatives Association documentation framework, including the ISDA Master Agreement and accompanying schedules, is the principal industry-standard documentation for OTC derivatives and the near-universal framework for cross-border derivatives activity by Turkish financial institutions. The ISDA architecture — netting, close-out, credit support — is operationally significant for any bank active in derivatives markets.
OECD Common Reporting Standard (CRS)
Global framework for the automatic exchange of financial account information for tax purposes. Türkiye is a participating jurisdiction and has implemented CRS reporting requirements applicable to financial institutions across banking, asset management and insurance — imposing due diligence, reporting and record-keeping obligations on all Turkish financial institutions maintaining accounts for non-resident clients.
LMA / LSTA Loan Documentation Standards
The Loan Market Association (Europe) and Loan Syndications and Trading Association (US) standard loan documentation frameworks provide the foundation for cross-border syndicated lending. Turkish banks routinely participate in syndicated facilities documented under LMA standards — requiring Turkish-law counsel with command of both the LMA documentation framework and the Turkish regulatory constraints applicable to the Turkish participant.
New York Convention (1958)
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards is the principal instrument for enforcement of commercial arbitration awards arising from financial contracts. In force in over 170 States, including Türkiye since 1991. Financial contracts routinely include international arbitration clauses with seats in London, Paris, Geneva or Singapore; the Convention provides the enforcement mechanism for the resulting awards.
Our Approach
How Mermeroglu Legal Engages
Financial institutions mandates typically engage the prudential law of the institution's home jurisdiction, the law of any host jurisdiction in which it operates, and the substantive law governing the underlying transactions. A cross-border syndicated facility may simultaneously face Turkish banking regulation for the Turkish participant, English law for the facility documentation, and US sanctions exposure for USD-denominated payments. Our practice is structured to coordinate across those legal systems through a single point of accountability.
Each mandate is led by a single matter principal at the firm, supported by an internal team drawing on banking and finance, capital markets, regulatory, M&A and disputes practices. Where the matter requires advice on the law of jurisdictions outside Türkiye, we work through long-standing alliance arrangements with foreign counsel, including in the principal international financial centres relevant to the institution's activities.
We treat financial institutions work as a structurally regulatory practice. Most matters that initially present as transactional — an acquisition, a product launch, a portfolio sale — ultimately turn on the response of the relevant supervisor. Our approach is to engage regulatory analysis at the start of each mandate, rather than as a clearance step at the end.
Initial enquiries relating to financial institutions matters may be directed to the firm's main contact channels. Where the matter concerns a specific transaction, dispute or regulatory question, the firm will identify the relevant matter principal and constitute the appropriate internal and alliance team.
INITIAL ENQUIRIES
Financial institutions mandates are handled through coordinated internal and alliance teams with regulatory, transactional and disputes expertise across jurisdictions.
Contact Us