38428 - DCM Seker CB 2

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Summary of Investment Information

Project Number

38428

Company Name

SEKERBANK TAS

Date SPI Disclosed

Aug 17, 2016

Country

Turkiye

Region

Central Asia and Turkiye

Projected Board Date

Sep 30, 2016

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Oct 22, 2021

Department

Regional Industry FIG MCT

Industry

Financial Markets

Previous Events

Approved : Nov 17, 2016
Signed : Nov 21, 2016
Invested : Nov 21, 2016

Sector

Commercial Banking - Microfinance

Project Description

The project consists of an IFC investment up to US$60 million equivalent to be invested in Turkish Liras in the new issuances of Sekerbank’s Covered Bond Programme with a 5 year tenor.
Proceeds of IFC’s proposed investment would provide medium and long-term financing to micro, small, and medium enterprises (“MSME”) in Turkey.

Sekerbank was established in 1953 in Turkey by several sugar beet cooperatives to respond to their financial needs. Sekerbank held an initial public offering in 1997 and subsequently implemented a transformation program in 2002 to restructure and improve its operations. As a result, the bank became a multi-channel, diversified financial institution targeting customer segments with appropriate products and services primarily in MSME banking segment. Sekerbank services 71 of the 81 provinces in Turkey through a network of 301 branch and employs 3,818 staff member.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	60.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Loans to Microfinance Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

1. Improved access to MSME finance including the underserved agricultural sector, which will help improve financial inclusion for the MSMEs. Despite high growth, only 38% of loans to businesses in Turkey are channeled to MSMEs;
2. Creation and preservation of jobs, as experience has shown that MSMEs in Turkey grew faster than the Turkish economy, contributing significantly to employment creation;
3. Supporting investments in frontier regions of Turkey as 75 percent of the funded MSME portfolio is located outside the three major Turkish cities.

IFC''s additionality stems from:
1. Providing longer term funding, not readily available in the market to support a mid-tier bank in Turkey in growing its MSME portfolio, thus helping the bank manage maturity mismatches effectively.
2. Increase confidence in the Turkish banking sector through IFC''s long term engagement, as the case was with IFC''s earlier investments which mobilized additional loans for the bank.
3. Local currency financing which is challenging to find at a reasonable funding cost.
4. Long term partnership as IFC continues to support the client through various investments since 2007.

Indicator	Metrics	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
CORE - E and S Management Systems (Y/N)	Compliance/Enhancement	Not Available	Not Available	Not Available
Access to Finance: Outstanding Microfinance Portfolio (#)	Outstanding Portfolio (#)	Not Available	Not Available	Not Available
Access to Finance: Outstanding Microfinance Portfolio ($)	Outstanding Portfolio ($)	Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

This project consists of an IFC investment of up to US$60 million in new issuances of Sekerbank’s Covered Bond Program, where proceeds of IFC’s investment would provide medium and long-term financing to micro, small, and medium enterprises (“MSME”) in Turkey. The highest exposure in the bank’s MSME portfolio is to wholesale and retail trade, manufacturing, construction, and tourism & restaurants, generally medium and low risk sectors. Therefore, the project has been classified as category FI-2 according to the IFC Environmental and Social Review Procedure. For this particular project, IFC''s applicable requirements will be to ensure that all projects that fall under the asset class are screened against the IFC Exclusion List, and the applicable environmental and social national laws and regulations. In addition Sekerbank 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 Sekerbank 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. Sekerbank has an Environmental and Social Management System (“ESMS”) in place which is applicable to the entire bank portfolio, and has designated staff members with overall responsibility for implementation of the ESMS. The ESMS will need to be enhanced to reflect the requirements for this new project. Sekerbank's HR Practices are in general in conformity with IFC's PS2 on Labor and Working conditions.

Contacts

For Inquiries About the Project, Contact

Sekerbank T.A.S.
Emniyet Evleri Mh. Eski Büyükdere Cad. No: 1/1A
Kağıthane İSTANBUL – TURKEY

Attention: Ms. Oya Sari
Structured Finance and Investor Relations International Banking Group
Tel: +90 (212) 319 71 58
Fax: +90 (212) 319 71 62

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Task Title & Description	Anticipated Completion Date
Staff Training	09/30/2016
Enhance ESMS	09/30/2016
Implement ESMS and provide IFC with an ESMS implementation report	04/08/2017
Provide due diligence records to IFC	09/30/2016
Implement staff training plan	04/08/2017

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