39501 - DCM-YKB Covered Bond

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Summary of Investment Information

Project Number

39501

Company Name

YAPI VE KREDI BANKASI ANONIM SIRKETI

Date SPI Disclosed

Apr 25, 2017

Country

Turkiye

Region

Central Asia and Turkiye

Projected Board Date

Jun 2, 2017

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Nov 24, 2022

Department

Regional Industry - FIG - ECA

Industry

Financial Markets

Previous Events

Approved : Jun 9, 2017
Signed : Sep 29, 2017
Invested : Oct 13, 2017

Sector

Commercial Banking - Housing Finance

Project Description

The proposed project (the “Project”) involves supporting Yapi Kredi Bank A.S. (“YKB”, or the “Bank”), through the purchase of an IFC-only issuance of covered bond of up to US$150 million. The underlying asset pool will be backed by YKB’s existing mortgage portfolio. The proceeds of IFC’s investment would provide YKB long term financing to support the mortgage segment of its lending operations, with some portion to be allocated to ‘green’ mortgages per IFC's eligibility criteria.

Established in 1944, YKB is the 4th largest private bank in Turkey; operating in retail (individual and SME), private and corporate / commercial banking. As of end-2016, YKB operates all around Turkey through its 936 branches and 19,400+ employees. In addition to universal banking services, Yapi Kredi Group also operates in leasing, factoring and asset management businesses. Yapi Kredi Group also has banking subsidiaries in the Netherlands, Russia, Azerbaijan and Malta.

As of end-2016, YKB posted Total Assets of TRY271 billion, Net Loans of TRY176.5 billion and Net Income of TRY2,932 million on a consolidated basis.

YKB is an existing IFC client.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	150.0
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	Housing Finance

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

Development Impact

1) Support growth in the mortgage sector with long-term funding: With this project, IFC will provide long term funding to contribute to accelerated growth in the mortgage sector. IFC's financing would improve access to housing finance in Turkey, which has an attractive demographic profile and is underpenetrated. 2) Deepen Partnership with systematically important bank to work together in priority areas: The project will strengthen IFC's long-term partnership with Yapi Kredi Bank by supporting it in areas of strategic interest such as climate change and development of housing markets in Turkey.

1) Increased availability and affordability of mortgage products: By providing long term funding, the Project will enable YKB to expand its mortgage lending and increase its penetration into markets. The project's development impact is noteworthy as housing finance contributes to social stability by enabling households to purchase an asset that will represent their largest single investment. 2) Development of the Housing Finance Sector: This project presents an excellent opportunity to promote the development of mortgage sector in Turkey through long term funding. 3) Mitigate climate change: Turkey is in the process of replacing its older, earthquake-vulnerable housing stock, and like all developing countries, Turkey is becoming more urban. By financing energy efficient housing through green mortgages, this project is expected to help reduce the climate impact of new construction.

E&S Category Rationale / Risks and Mitigation

The project consists of investing up to US$150 million in a new tranche under Yapi Kredi Bank’s ("YKB") existing Covered Bond Program. The proceeds of IFC’s investment would be used to finance residential mortgages in Turkey by YKB. The project has been classified as a Category FI-3 according to IFC’s Environmental and Social Review Procedure, since mortgages have low E&S risks by nature. As per the requirements of this project, the Bank will comply with IFC's PS2 on Labor and Working Conditions.

Contacts

For Inquiries About the Project, Contact

Yapi ve Kredi Bankasi A.S.
Ms. Sinem Emiroglu
Head of Financial Institutions
+90 212 339 70 00
sinem.emiroglu@yapikredi.com.tr
Yapi ve Kredi Bankasi A.S. Yapi Kredi Plaza D Blok Levent 34330 Istanbul Turkey
www.yapikredi.com.tr

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