The European Bank for Reconstruction and Development (EBRD) is providing further support for micro, small and medium-sized enterprises (MSMEs) in Turkey’s developing regions with a US$ 65 million subordinated loan to Türk Ekonomi Bankası (TEB), which will also strengthen the capital structure of the bank.
TEB will on-lend the EBRD funds to MSMEs operating predominantly outside of big cities, increasing credit availability to these businesses. With this loan, the EBRD aims in particular to assist MSMEs – including companies with fewer than ten employees – and also to boost agribusiness in developing areas where access to financing remains limited.
MSMEs are the driving force of the Turkish economy, accounting for 80 per cent of employment and 60 per cent of exports, while agriculture accounts for around 10 per cent of GDP.
“A high proportion of small businesses outside big cities are involved in agriculture and these enterprises would benefit from substantially enhanced credit from commercial banks. The EBRD has a focus on making financing – the lifeblood of businesses – more accessible in developing regions. We are particularly happy to build on our successful cooperation with TEB and to help it expand its MSME lending,” said Mike Davey, EBRD Director for Turkey.
“The farmers have strategic importance for increasing the welfare of Turkish society and of the economy. With this awareness, to become one of the top two private commercial banks within the sector we signed an important agreement with the EBRD to continue our support to Turkish farmers. With this agreement we will provide a US$ 65 million loan to farmers to contribute to their growth,” said Turgut Boz, TEB SME Banking Assistant General Manager.
Controlled by BNP Paribas and Çolakoğlu Group, TEB was the sixth-largest private bank in Turkey according to unconsolidated asset size in the first quarter of 2013. The EBRD has previously invested US$ 65 million in TEB for on-lending to agribusinesses in rural areas to encourage their growth. Financing has been provided to 409 companies, all located in remote regions.
Increasing support for small and medium-sized enterprises is one of the ways in which the EBRD is boosting growth in Turkey. So far the Bank has disbursed around US$ 500 million to Turkish SMEs through such credit lines to local banks. Since the start of its operations in Turkey in 2009, the EBRD has invested more than €3 billion in the country, both in direct projects and through credit lines. Last year Turkey became the EBRD’s second-largest country of operations by annual business volume, with €1 billion in new investments in 2012 alone.