EBRD channels US$ 100 million for Turkish SMEs via Garanti Bank

By Svitlana  Pyrkalo

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Supporting small and medium-sized enterprises (SMEs) in economically underdeveloped regions of Turkey is one of the priorities of the European Bank for Reconstruction and Development (EBRD).

In a new transaction, the EBRD is channelling up to US$ 100 million (up to €73 million) to one of its largest partner banks in Turkey, Garanti Bank, which will use the proceeds to increase SME lending in economically depressed regions.

The EBRD transaction consists of investment in a series of rated senior bond notes issued under Garanti Bank’s existing Diversified Payment Rights programme. The transaction will also pave the way for testing the emerging methodology for SME “cluster finance” which Garanti Bank has identified as one of the priorities for its SME support strategy. Cluster finance will allow financial institutions to better reach their SME clients by grouping them into clusters according to their industry or region.

Francis Malige, the EBRD Director for Financial Institutions, Turkey, said: “Our new transaction takes the total amount of EBRD financing for small and medium-sized businesses in Turkey to over €570 million since the beginning of our operations there in 2009. It follows a successful credit line to Garanti Bank for women-led SMEs which was signed last year and is very popular with women entrepreneurs, especially outside the big cities.”

Nafiz Karadere, Executive Vice President, Garanti Bank, said: “This deal continues the fruitful cooperation between our two institutions aimed at increasing SME financing to underprivileged regions and underserved categories of entrepreneurs. The transaction supports financial innovation which may help financiers reach larger numbers of small businesses in remote regions.”

To date, the EBRD has invested over €3 billion in about 100 different projects across various sectors of the Turkish economy.

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