Garanti Bankasi Covered Bond

Location:

Turkey

Project number:

46302

Business sector:

Financial institutions

Notice type:

Private

Environmental category:

FI

Target board date:

20 Jul 2016

Status:

Signed

PSD disclosed:

21 Jul 2017

Translated version of this PSD: Turkish

Project Description

The European Bank for Reconstruction and Development (EBRD) is investing the equivalent of up to EUR 75 million in Turkish lira (TRY) in a private placement of a covered bond issued by Turkiye Garanti Bankasi AS (Garanti). The covered bond is backed by a portfolio of residential mortgages and expected to be rated Baa1 by the rating's agency Moody's.

Project Objectives

The transaction will support Garanti in accessing medium- to long-term funding in local currency by using a covered bond instrument collateralised against a pool of residential mortgage loans. The proceeds will increase financial intermediation and financing of energy efficiency investments and assist Turkish households in mitigating increasing energy prices and reducing high energy intensity. Under the EBRD's Turkey Residential Energy Efficiency Financing Facility (TuREEFF) Garanti plans to build on its green mortgage financing and encourage developers to build more energy efficient residential buildings to help decrease total levels of energy consumption in the
country, boost the economy and preserve the environment by reducing CO2 emissions.

Transition Impact

The transition impact under the covered bond derives from (i) demonstration of new forms of finance where by supporting mortgage covered bonds under the revised legislation expected to contribute to the dispersion of knowledge amongst the market participants structuring and investing in these asset classes; (ii) demonstration of balance sheet restructuring through providing long term financing to address current asset-liability maturity mismatch; (iv) and setting new standards.

Under TuREEFF, transition impact will stem from (i) Demonstration effect: The facility will help to leverage the scope of the existing mortgage products to generate transition impact through the banking products; (2) Expansion of sustainable energy markets through increased penetration of low-carbon technologies: the facility promotes penetration of energy efficient and renewable energy technologies above the current market practice through stimulating demand and market awareness campaigns; (3) Transfer of skills: by providing capacity building through training of loan officers from various departments, product development and marketing outreach support.

Client Information

TURKIYE GARANTI BANKASI AS

Garanti, listed on Borsa Istanbul, is the third largest bank in Turkey (by assets) and the second largest privately-owned bank. Garanti is rated BB by S&P, Ba2 by Moody's and BBB- by Fitch. As a universal bank, Garanti serves over 14.5 million customers in the corporate, commercial, MSME and retail segments, offering fully integrated financial services through its wide network of branches.

EBRD Finance Summary

EUR 100,000,000.00

EUR 75 million equivalent in TRY investment in a private placement under Garanti's Covered Bond Programme.

Total Project Cost

EUR 500,000,000.00

EUR 75,000,000

Environmental and Social Summary

Categorised FI (2014) Garanti has been satisfactorily implementing the EBRD's E&S requirements to date under the existing exposures and is in compliance with EBRD's Performance Requirements (PRS) 2, 4 and 9. Garanti will be required to continue to comply with the PRs implement the EBRD's E&S Risk Management Procedures for Mortgage lending, ensure that sub-loans under TUREEFF comply with the eligibility criteria for residential energy efficiency and submit Annual Environmental and Social Reports to the Bank.

Technical Cooperation

TuREEFF is supported by a comprehensive Technical Cooperation (TC) programme provided by the EU Instrument for Pre-Accession 2014 funds and the Clean Technology Fund. The focus of the TC programme lies on institutional capacity building, product development and marketing and outreach activities to build participating banks' capacity increase Energy Efficiency and small scale Renewable Energy lending.

Company Contact Information

Gencay Gedik
gencayge@garanti.com.tr
0090 212 318 17 33
0090 212 216 62 17

www.garanti.com.tr
Levent, Nispetiye Mah. Aytar Cad. No:2 34340 Besiktas, Istanbul, Turkey

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