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EBRD to co-finance investment projects with Turkey’s Garanti BBVA

By Olga Rosca

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  • EBRD extends risk-sharing facility to Garanti BBVA
  • Partnership to help improve access to finance for Turkish firms at critical time
  • Financing to eligible companies to be split 50:50 between two lenders

The EBRD continues to expand access to finance for Turkish businesses amid the coronavirus pandemic with a new agreement with Garanti BBVA.

The EBRD is providing a risk-sharing facility, which – together with Garanti BBVA – will facilitate lending to local companies, primarily small and medium-sized enterprises (SMEs).

Under the agreement, the EBRD will share the risk of up to 50 per cent of each individual sub-loan provided to eligible businesses, identified jointly by the two lenders.

Clients can use the loans to finance working capital, capital expenditure and refinance existing loans. Funds can also be used as project finance for long-term projects, such as in the infrastructure or energy sector.

Arvid Tuerkner, EBRD Managing Director for Turkey, said: “Small businesses, hit hard by the pandemic, can find themselves starved of credit. The EBRD has been working hard since the onset of the coronavirus outbreak to channel much-needed funds through Turkish banks. We are delighted to join forces with our long-standing partner Garanti BBVA which is matching our contribution.”

Recep Bastug, Garanti BBVA Chief Executive Officer, said: “As Garanti BBVA, we transfer the risk weight responsibility of half the amount to the EBRD for the loans that meet the specified criteria. This agreement has great importance in terms of being the first transaction based on risk sharing with the EBRD. Companies operating in the infrastructure and energy sector will be able to use the loan that we will fund jointly with the EBRD for the purpose of refinancing working capital, capital expenditures and existing loans. We believe that banks have an essential role to play in addressing sustainability. At a time when financial markets are so challenged by the pandemic, this agreement based on risk sharing has once again registered the international trust in our bank.”

The risk-sharing facility builds on the US$ 55 million EBRD loan provided to Garanti bank in May 2020 and aims to boost bank lending in Turkey, as the private sector is experiencing difficulties caused by the Covid-19 outbreak.  

The financing is part of the EBRD’s efforts to help countries in its regions to combat the economic impact of the coronavirus pandemic and support their recovery.

The EBRD is a major investor in Turkey. Since 2009 it has invested €12.8 billion through some 330 projects in various sectors of the country’s economy, with almost all investment in the private sector. The EBRD’s €7 billion portfolio in Turkey is the largest among the 38 economies where the Bank invests.

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