33154 - Denizbank Covered Bond

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Summary of Investment Information

Project Number

33154

Company Name

dummYDenizbank Covered Bond

Date SPI Disclosed

Mar 19, 2013

Country

Turkiye

Region

Central Asia and Turkiye

Projected Board Date

Apr 19, 2013

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Nov 30, 2016

Department

Regional Industry FIG MCT

Industry

Financial Markets

Previous Events

Approved : Apr 24, 2013
Signed : May 14, 2013
Invested : Jun 6, 2013

Sector

Commercial Banking - Microfinance

Project Description

IFC proposes to purchase of up to TRY125 million of covered bonds with a term of up to 3 years bullet to be issued by Denizbank The bonds will be direct obligation of Denizbank, and will be over-collateralized by a pool of SME loans ring-fenced for the benefit of bondholders.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	69.02
Equity

Development Impact

- Capital Markets Development: Successful issuance by Denizbank would provide additional momentum to Turkey''s capital markets by replicating the first two transactions by Sekerbank and Yapikredi.
- Access to Finance for MSMEs: Help strenghten the newly opened covered bond market in Turkey and allow banks (including tier 2 banks) to raise long-term funding from domestic and international investors in order to finance MSME''s especially in the agribusiness sector.

- Play the role of a lead investor and provide a signaling effect that could help attract other investors.
- Leverage IFC''s experience in structuring bond issues and completing market-first transactions. Add value by structuring the covered bond based on best-practice / international standards to improve protection for investors.
- Provide funding in local currency with longer maturity and better amortization profile than readily available in the market.

E&S Category Rationale / Risks and Mitigation

This project consists of an IFC investment in Denizbank Bank for on-lending to SMEs whose main business or activity is primary agricultural production. Denizbank''s agribusiness portfolio account for approximately 6 % of the total portfolio and the project has therefore been categorized as FI-2 according to IFC’s Environmental and Social Review Procedure. For this project the client will be required to screen eligible loans against the IFC Exclusion List, and host country Environmental and Social laws and regulations. In addition Denizbank will comply with the requirements of IFC’s PS2 on Labor and Working conditions.

The main E&S risks and impacts of this investment relate to Denizbank having adequate systems and capacity in place to manage the operations being financed in accordance with applicable requirements, including compliance with the IFC’s Exclusion List, and Host Country Laws and Regulations.

Denizbank has an Environmental and Social Management System (“ESMS”) in place for SME lending, and has designated staff members with overall responsibility for implementation of the ESMS. The ESMS will be revised to include i) guidance notes and tools for its implementation, ii) Emergency preparedness and external grievance mechanism of the bank, iii) revised scope of the implementation considering the eligibility criteria. Denizbank''s HR Practices are in general in conformity with IFC''s PS2 on Labor and Working conditions, the bank is only required to prepare a written internal grievance mechanism.

Contacts

For Inquiries About the Project, Contact

Structured Finance, Treasury
Denizbank A.S.
Buyukdere Cad. No: 106, Esentepe
34394 Istanbul – Turkey
+902122729975

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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Task Description	Anticipated Completion Date
Enhance and Revise ESMS	Prior to commitment
Implement ESMS and provide IFC with an ESMS implementation report	Within 3 months after disbursement
Prepare Staff Training Plan	Prior to Commitment
Implement Staff Training	Ongoing
Enhance HR Practices in line with IFC Performance Standard 2: Labor and Working Conditions	Prior to Commitment

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