EBRD boosts lending to micro and small businesses in Turkey

By Ina Coretchi

The EBRD is boosting the availability of finance to private businesses in Turkey with a €50 million syndicated loan facility to Garanti Bank for on-lending to micro, small and medium-sized enterprises (MSMEs) operating outside the main Turkish cities.

Garanti Bank is a leading lender to MSMEs and the second largest private bank in Turkey by assets, serving more than eight million customers.

While micro and small-sized companies represent a significant part of the Turkish economy, their growth is constrained by limited access to finance. Businesses in rural areas are particularly affected.

The proceeds of the EBRD funds will be used to finance the investments of small companies operating outside the three main Turkish cities Ankara, Istanbul and Izmir. A part of the loan will be used to continue Garanti Bank’s support to female entrepreneurs in rural areas. The loan will increase Garanti Bank’s commitment to this niche market and will provide a variety of tailored financial products.

The project will support Garanti Bank’s drive to broaden the geographical coverage of its lending activities and build up the availability of competitive financing products to small businesses.

Successfully syndicated under the EBRD A/B structure, the Bank is retaining €20 million on its account. The remaining €30 million is provided by the Netherlands Development Finance Company (FMO), the International Co-operation and Development Fund (TaiwanICDF) as well as by a group of commercial banks: AKA Ausfuhrkredit, Bank of Taiwan, BRE Bank, Chang Hwa Bank, Land Bank of Taiwan and Raiffeisenlandesbank Niederosterreich-Wien.

“The small business sector is a crucial part of the Turkish economy and Garanti Bank is well placed to provide the support it needs”, said Varel Freeman, EBRD First Vice-President.

“Garanti is the first bank in Turkey to establish a separate business line for small and medium enterprises (SMEs), disbursing the highest amount of loans to SMEs in the country. We believe that this transaction is an important facility manifesting future collaborations of the two institutions for the promotion of the Turkish economy”, said Tolga Egemen, Executive Vice President for Financial Institutions and Corporate Banking from Garanti Bank.

With assets exceeding $65 billion, and recognised for its customer oriented approach and innovative culture, Garanti Bank operates through a wide distribution network of over 750 branches including five foreign branches and four international representative offices, more than 2650 ATMs, an award winning call centre and a state-of-the-art internet and mobile banking technology.

This is the second EBRD transaction in the Turkish banking sector. In October the EBRD has signed a €20 million credit line to DenizBank for financing small and medium-sized agribusinesses companies in Turkey.

EBRD has a small business portfolio of over $1 billion across its countries of operation.