EBRD lends TRY 100 million to Turkey’s Dunya Varlik

By Olga Rosca

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  • TRY 100 million facility to the country’s leading NPL management firm
  • Funding to support acquisition of new NPL portfolios after market slowdown due to Covid-19 pandemic
  • Healthy levels of NPLs would support financial resilience and enable new lending by banks

In a move to help Turkey tackle the expected increase in non-performing loans (NPLs) in its banking sector due to the Covid-19 pandemic, the European Bank for Reconstruction and Development (EBRD) is providing a TRY 100 million facility to the country’s leading NPL management firm Dunya Varlik Yonetim A.S. (Dunya Varlik).

The loan will support the company’s operations and enable Dunya Varlik to buy new distressed portfolios from local banks and other financial institutions.

The Turkish economy is under stress due to high inflation and the depreciation of the lira. A large build-up of NPLs on the balance sheets of banks could affect the banks’ cost of funding and their profitability, and may impair their capacity to lend to the real economy.

Boosting Dunya Varlik’s ability to acquire and manage NPLs will help clean up the banks’ balance sheets and free up their capacity for new lending. It will also contribute to a strong and efficient NPL market in the country.

The EBRD is a 12 per cent shareholder in Dunya Varlik and has previously invested a total of TRY 76 million (€12.3 million equivalent) in seven of the company’s bond issuances. The Bank has also provided the company with TRY 220 million in loans and has mobilised TRY 60 million in parallel financing from ICBC Turkey. 

The EBRD is a leading institutional investor in Turkey and has invested €15.4 billion in 370 projects in the country since 2009. The overwhelming majority of EBRD investments in Turkey are in the private sector.

Last year alone, the Bank invested more than €2 billion in Turkey, which remains the top destination for EBRD finance.

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