A long-term local currency loan to Arcelik, an innovative home appliances maker, an investment in bonds issued by Migros, a leading supermarket chain, and a stake in a fast-growing online fashion retailer, Modanisa – these are just three examples of the EBRD’s successful work in Turkey in 2019.
Against the background of a challenging environment the EBRD is maintaining a strong focus on Turkey. In 2018 alone, the Bank invested €1 billion in the country. Turkey remains by far the largest portfolio among the 38 economies where the Bank currently invests.
The EBRD will maintain its investments and engagements in Turkey in response to demand for what the Bank can offer.
This includes bespoke financial products – ranging from long-term equity investment to innovative financing solutions for women entrepreneurs – as well as support for sector policies needed for successful sustainable growth.
Only economies that benefit their people are successful economies. The EBRD is making a vital contribution to this effort, and here are some examples:
- In early 2019, the EBRD provided close to 1 billion Turkish lira, or €150 million, to a Turkey-based global consumer durables firm, Arcelik, which is owned by Koc Holding. Arcelik will use the loan to produce more energy efficient and low-noise refrigerators and washing machines. The new appliances, as well as the improved manufacturing process, will consume less energy and resources.
- Migros, a leading supermarket chain in the country, is using EBRD financing to introduce LED lightning, efficient display food refrigerators, energy efficient air conditioning, infrastructure for collecting recyclable waste and a smart energy management system across the entire chain. Raising the bar for environmental sustainability among big and small firms alike is and will remain a major theme for EBRD investments.
- Many businesses in Turkey find themselves in a vulnerable position following last year’s dramatic currency depreciation. In response, the EBRD increased its support for Turkish lira financing to one third of its total investment in the country last year. So far this year, the majority of our financing in Turkey has been in local currency. We plan to continue making long-term Turkish lira funding available to the private sector as part of a balanced financing mix.
We are also ready to support Turkish banks. Often considered an anchor of the country’s economy, the banking sector is under stress and an increase in non-performing debt is currently constraining the capacity to lend to the real economy.
In one of our first transactions in 2019, the EBRD has expanded financing for the Turkey’s leading non-performing loans (NPL) management firm, Hayat Varlik. The new funds will enable Hayat Varlik to buy new distressed portfolios from local banks and other financial institutions.
The EBRD stands ready to help clean up the balance sheets of Turkish lenders and free up their capacity for new lending.
We are currently sharing with Turkish colleagues our experience in NPL resolution from other countries where we invest. The Bank is also developing specialist training for debt recovery professionals and stands ready to work together with the regulator and all stakeholders to design concrete NPL resolution mechanisms.
The EBRD is and will remain a relevant partner: financially strong, agile in our operations and flexible in our approach.
The EBRD also remains available with its own finance and expertise to support the use of EU funds, allocated to Turkey, in a cost-effective and efficient manner. Our priority is to encourage and enable the dynamics of the private sector.
The EBRD has the means, the expertise and the commitment to move forward in all our existing regions. And our donors play a major role in our delivery, both with advice and with finance.
We are as diverse as our countries and as committed as its people: we are doing more to achieve more. #EBRDMore for more growth, more jobs, more prosperity.
Arvid Tuerkner is the EBRD Managing Director for Turkey and is based in Istanbul.