G4-DMA, G4-14, G4-34, G4-38, G4-40, G4-42, G4-46, G4-47

Embracing a corporate governance approach centered on fairness, transparency, accountability, and responsibility, Ziraat Bank establishes participative processes for its stakeholders to create more added value in its corporate governance processes. The Bank's benchmark practices in corporate governance provide opportunities of comparison and inspiration for the entire industry.

The Decision Maker in Corporate Governance Policies: Board of Directors

At Ziraat Bank, the Board of Directors consists of nine members, who are elected for a term of three years at maximum. The Board's number of members are sufficient for the efficient organization of the Bank's operations. The duties of the Chairman and CEO are performed by different individuals. The Chairman has no executive duties. All Board members fulfill the requirements included in CMB's Corporate Governance Principles concerning the election of Board members. Furthermore, the majority of Board members are independent.

The Corporate Governance Committee makes recommendations to the Board of Directors in order to ensure compliance of the Bank's corporate governance processes with CMB principles, and performs monitoring, audit and improvement activities.

Table: Ziraat Bank Board Members

Members	Duty
Muharrem KARSLI	Chairman
Yusuf DAĞCAN	Vice Chairman and Member
Hüseyin AYDIN	CEO and Member
Fahrettin ÖZDEMİRCİ	Member
Feyzi ÇUTUR	Member
Metin ÖZDEMİR	Member
Mustafa ÇETİN	Member
Cemalettin BAŞLI	Member
Salim ALKAN	Member

The Ziraat Bank CEO is fully authorized and responsible for the conduct, administration, and coordination of the Bank's day-to-day business in the broadest sense. There are nine Assistant General Managers, each of whom is responsible for a designated aspect of the Bank's business. Ziraat Bank's senior management consists of its CEO and the Assistant General Managers.

Compliance with Banking and Commercial Legislation

Because Ziraat Bank is a wholly state-owned bank, it has no real-person ultimate controlling stockholder. Ziraat Bank's sole shareholder is the Undersecretariat of the Treasury of the Republic of Turkey. The highest governing body at Ziraat Bank is the Ziraat Bank Board of Directors. The selection of Board members and the members of other Bank committees is subject to the provisions of the third section of the Bank's Articles of Association. Some of the professional managers who sit on the Board of Directors and take part in the senior management also serve as Board members at Ziraat Bank subsidiaries that make up Ziraat Finance Group. Principles governing the involvement of Ziraat Bank Board Members in duties outside the Bank are subject to the provisions of the Banking Act, Turkish Commercial Code, and other applicable legislation.

Committees established in accordance with the Turkish Commercial Code, Banking Act, and other applicable legislation consist of the following:

• Credit Committee
• Audit Committee
• Corporate Governance Committee
• Remuneration Committee.

The Ziraat Bank Board of Directors is authorized to set up other committees as it deems necessary.

G4-14

Innovative Practices in Internal Audit, Internal Control, and Risk Management

Innovative Practices in Internal Audit

Ziraat Bank keeps a close watch on innovative practices in international banking. At Our Bank, branch audits are performed in line with the customer-centered audit model. The reports produced are recorded in the Bank's Virtual Archive with e-signature, and no physical print-outs are taken in line with the efficient resource management strategy.

Measures to Boost Internal Audit Efficiency

Ziraat Bank closely monitors all inspection and investigation assignments to ensure that audit operations are performed by the optimum number of examiners. In order to perform accurate workforce and time planning, an optimal division of labor is planned in a swift and efficient manner on the assignment monitors. As a result, important progress is made in terms of time and cost savings. As for the audit of Ziraat Bank's overseas branches and subsidiaries, and domestic subsidiaries, work was initiated on a Web Based Audit Model, which will yield equivalent/convertible reports for audits in different business lines and countries. Additionally, by using the Audit Model as a reference, work was initiated to migrate the Bank's information systems process audit to the system. The model will grant a much leaner structure to Ziraat Bank's information systems process audit.

Instant Control Project

In 2015, Ziraat Bank launched the Instant Control Project, which allows the instantaneous control of branches. In line with the risk criteria identified by this system, the Instant Control Team can start auditing branch transactions as soon as they are performed; furthermore, in case an error is detected, the Team can contact the branch to take the necessary measures in the same day. Thanks to this project, which serves as an example to stakeholders, Ziraat Bank minimizes the costs related to erroneous transactions and effects significant time, energy and paper savings. To develop scenarios for the instant control process in 2016, Ziraat Bank will improve the efficiency of the internal control system in order to swiftly analyze a larger number of transactions in a short period of time, in keeping with its risk-centered approach.

"Customer Risk Rating" Studies

In 2015, in accordance with its motto "Know Your Customer" and as part of its "Customer Risk Rating" studies, Ziraat Bank established a module integrated with its core banking system designed to create customers' money laundering and terrorism finance risk profiles. The profiles are based on criteria such as profession, financial situation, business track record, accounts, commercial activities and country of residence. The aim is to identify high risk customers, business relations and transactions. By means of this module, customers were categorized according to risk categories, and the necessary action was taken as regards high risk customers.

In 2015, the Bank continued to support the overseas branches and subsidiaries under the umbrella of Ziraat Finance Group in improving and enhancing their processes pertaining to the prevention of money laundering and terrorism financing, in line with the regulations of their respective industries and countries. Ziraat Bank aims to develop technology-oriented harmonization processes in coordination with other members of the Ziraat Finance Group in 2016, in due consideration of local and international regulations.

Innovative Practices in Risk Management

In 2016, Ziraat Bank aims to launch a comprehensive project for loan risk measurement based on an internal rating scheme. Calculation of the loan risk through sophisticated methods will offer the Bank the following competitive advantages:

• Transaction and customer risk will be measured in a more accurate and objective manner, and the results will be quantified. The project will yield results that will contribute to customer and portfolio analytics, and improvements will be made in the loan allocation and monitoring processes. The project will also make a contribution to the Bank's efforts to offer the right product to the right customer under the right conditions.
• The Capital Adequacy Ratio will be calculated in accordance with robust loan allocation processes, and the portfolio and collateral structure.
• The effort will boost balance sheet management performance, by helping the Bank keep abreast of the latest developments and the competition, offering input on pricing and performance measurement, and improving productivity.

G4-14, G4-41, G4-49, G4-DMA, G4-SO4

Measures against Laundering of Proceeds of Crime and Terrorism Financing

Ziraat Bank's efforts against the laundering of proceeds from crime and terrorism financing are conducted in line with the policy disclosed to the public on the corporate web site as well as the current legislation. Bank management strives to ensure full employee compliance with the referenced standards to prevent the employment of its products and services for laundering proceeds of crime or financing terrorism.

At Ziraat Bank, the Audit Committee is responsible for fulfilling the duties outlined in the Harmonization Program in keeping with the Regulation on Complying with Obligations for the Prevention of Laundering Proceeds of Crime and Terrorism Financing and other relevant legislation.

Policies in Effect at Ziraat Bank

The policies approved and implemented by Ziraat Bank's Board of Directors are of vital importance for the functioning of the Bank's corporate governance structure and sustainability management.

Sustainability Policy

For Ziraat Bank's Sustainability Policy, see pp. 26-28.

At Ziraat Bank, the environment is taken into consideration in the scope of the Sustainability Policy.

Ziraat Bank aims to develop and implement a project concerning the Corporate Social Responsibility policy for investment loans in 2016. The project will strengthen the administrative organization for the functioning of the environmental and social risk management process and develop instruments of environmental and social risk management.

For the Public Disclosure Policy, see
DisclosurePolicy.pdf

For the "Prevention of Laundering Proceeds of Crime and Terrorism Financing" Policy
AMLPolicy.pdf

The below mentioned matters have been integrated within the human resources regulation, which is accessible by all employees via the Ziraat Bank intranet:

• Human Resources
• Remuneration
• Severance Pay
• Prevention of Bribery and Corruption

G4-DMA, G4-14, G4-56, G4-57, G4-58

Code of Ethics and Ziraat Bank

Ziraat Bank has adopted a Code of Ethics that was prepared and published by the Banks Association of Turkey in accordance with the requirements of Article 75 of the Banking Act (Law No. 5411). As such, Ziraat Bank regards the following as core tenets:

• All Bank managers and other employees must comply with the Ziraat Bank Code of Ethics.
• The principles embodied in the Ziraat Bank Code of Ethics are embraced by all Bank personnel.
• All of the Bank's activities and operations are conducted in line with the Ziraat Bank Code of Ethics.

In keeping with the Ziraat Bank Code of Ethics and in order to safeguard the rights and interests of accountholders, to maintain financial market confidence and stability, to ensure the effective operation of deposit, credit, and payment systems, and to prevent transactions and practices that might lead to serious economic losses and also to be mindful of social well-being and environmental protection, Ziraat Bank gives consideration to the following principles:

• Honesty
• Impartiality
• Reliability
• Transparency
• Respect for social well-being and the environment
• Prevention of money laundering and terrorism-financing
• Abuse of proprietary information

G4-14

Ziraat Bank Investor Relations Unit

A prominent body in the Bank's organizational structure, the Financial Institutions & Investor Relations Unit - reporting to the Financial Institutions & Investor Relations Department - is charged with managing shareholder relations in the event of a public offering of its shares, and with maintaining statutorily - prescribed transparency in dealings with shareholders. The Unit is ready to play an active role in the protection and exercise of shareholder rights, such as the right to obtain information and to research. As a result, although the Bank has not yet undertaken a public offering, it is already acting as if it has done so.

Ziraat Bank Corporate Web Site

Ziraat Bank's corporate website at www.ziraatbank.com.tr plays an important role in the Bank's public disclosure processes by providing access to up-to-date information about the Bank. Although Ziraat Bank is not a publicly-traded company, it nevertheless already complies with CMB's Corporate Governance Principles to a substantial degree. The extensive offerings of information and documents on the Ziraat Bank corporate website, published in both Turkish and English, include the Bank's trade registry information, current shareholding and management structure, Articles of Association, material event disclosures, financial statements and annual reports.

Ziraat Bank's Sustainability Policy and Sustainability Reports are submitted for the attention of stakeholders in the Sustainability Section of Ziraat Bank Corporate Website.