PASHA BANK ENG 20

Disclosures Concerning Administrative or Judicial Sanctions Imposed on the Bank and its Management due to Practices in Violation of Regulations There were no administrative or judicial sanctions imposed on the members of the Board of Directors due to regulatory violations in accordance with Banking Law and related legislation. In 2020, the obligations regarding the administrative and irregularity fines practiced by the regulatory and supervisory authorities for the legislative discords were met by means of benefiting from the discount permitted by the legislation and a total amount of TL 94,068 was paid. Lawsuits Against the Bank and any Probable Outcomes That Could Impact the Bank’s Financial Situation and Operations There are no lawsuits filed against the Bank in 2020 significant enough to have a material impact on its financial situation or operations. INFORMATION ON REGULATORY CHANGES THAT MAY HAVE A MATERIAL IMPACT ON THE OPERATIONS OF THE BANK As of the first quarter of 2020, various temporary regulations were made in our country as well as worldwide, concerning some of the obligations to be exercised by banks and the implementation of international regulations with the intention of easing the negative impact of COVID-19 pandemic specifically in the banking sector and in general on the macroeconomics. The Banking Regulation and Supervision Agency (“BRSA”) decided that the below mentioned important temporary regulations to be put into practice no later than 30 June 2021. • In line with the Regulation for the Calculation and Assessment of Capital Adequacy of Banks, simple arithmetic mean of CBRT buying rates for the last 252 business days preceding the calculation date could be used in the calculation of the value at credit risk when calculating monetary assets and the amounts of those items other than FC items measured in historic cost terms from out of non-monetary assets adjusted according to Turkish Accounting Standards and related special provision amounts, • As declared in the 4th and 5th articles of the Regulation Concerning the Procedures and Principles for Classification of Loans and Receivables and Legal Ratio Limitations mentioned in the Board Decision No.8948, dated 17 March 2020, it was decided to extend the minimum overdue duration stipulated as 90 days for being classified as a non-performing loan to 180 days, furthermore, banks would continue to set aside the provisions for loans that continued to be classified under Stage 2 despite being overdue for 90 days according to their own risk models that they use in the calculation of expected credit loss under TFRS 9. • As declared within the scope of the 4th article of the Regulation for Concerning the Procedures and Principles for Classification of Loans and Provisions mentioned in the Board Decision No.8970, dated 27 March 2020, it was decided to extend 30 days overdue duration for the loan to be classified under Stage 2 to 90 days for credits tracked in Stage 1 and banks would continue to set aside the provisions for loans that continued to be classified under Stage 1 despite being overdue for 30 days according to their own risk models that they use in the calculation of expected credit loss under TFRS 9. Due to the high level of uncertainty in the global markets caused by COVID-19 and in order to minimize the negative impact of the pandemic upon the economy, market, production and employment and to allow banks to utilize the funds at their disposal in the most efficient way possible, the asset ratio amendment Information on Significant Developments Related with the Bank’s Operations and Legal Disclosures Annual Report 2020 PASHA Bank Information on Management and Corporate Governance Practices 63