40713 - Garanti Facility

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Summary of Investment Information

Project Number

40713

Company Name

GARANTI BANK SA

Date SPI Disclosed

Nov 17, 2017

Country

Romania

Region

Europe

Projected Board Date

Dec 18, 2017

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

May 16, 2024

Department

Regional Industry - FIG - ECA

Industry

Financial Markets

Previous Events

Approved : Dec 20, 2017
Signed : Dec 21, 2017
Invested : Dec 28, 2017

Sector

Commercial Banking - SME Finance

Project Description

The proposed project consists of a senior loan of up to EUR80 million to existing IFC client, Garanti Bank S.A., Romania (“the Bank”). The purpose of the loan is on lending to small and medium enterprises, of which half to be on-lent to Women-Controlled SMEs (“the Project”). The proposed investment is consistent with IFC’s strategy in Romania and would help a good existing IFC client to expand its SME reach with focus on women owned businesses and, in parallel with project #40788 with Garanti Leasing Romania, would further strengthen the relationship with Garanti group.

Garanti Bank is a universal bank, with a market share as at December 31, 2016 of 2.3% in terms of total assets, ranking 10th out of the 37 banks operating in Romania. In 2007, Garanti Bank Turkey and GE, shareholders of Garanti NV, decided to increase their presence in Romania through a direct subsidiary instead of a branch and positioned it to become a full-fledged bank focusing on retail and SME markets. The new bank license was authorized by the National Bank of Romania in 2009 and the Bank became operational at the end of May 2010.

Associated Advisory Engagement

N.A.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	29.59
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 SME Borrowers
Straight Senior Loan	Loans to Woman-Owned SMEs

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

Development Impact

The main objectives of the project are to: (i) respond to the critical term funding gap for SMEs; (ii) generate employment through resultant growth of SMEs and investment in productive assets; and, (iii) increase financial inclusion in Romania: improved access to credit and increasing the economic power of women would translate into improved livelihoods for a wide cross-section of society.

- Long-term funding: IFC's proposed loan with 6-year maturity would allow the Company to better manage its maturity mismatches. - Gender finance: The Project is expected to address the gender finance gap as part of IFC's funding would be earmarked for women-owned enterprises. - Local currency funding: Part of the loan may be provided in local currency for longer tenors than typically available, thereby reducing foreign exchange risk for itself and its customers. - Long-term partnership: The proposed project would build on IFC's existing strong relationship with Garanti group.

E&S Category Rationale / Risks and Mitigation

The proposed project consists of a senior loan of up to EUR80 million to existing IFC client, Garanti Bank S.A., Romania, targeting small and medium enterprises, of which half to be on-lent to Women-Controlled SMEs. Garanti Romania's portfolio includes retail banking, long term SMEs, long term corporate finance and, short term corporate finance where the highest exposure in the bank's SME portfolio is to; construction, trade, services, wood products, finance and insurance, real estate, and nonmetallic mineral product manufacturing which are likely to have environmental and social risks and impacts that are few in number, generally site-specific, and largely reversible. The project has been classified as FI-2 according to IFC's Sustainability Policy.

The main E&S risks and impacts of this investment relate to Garanti Romania 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. Garanti Romania has an Environmental and Social Management System ('ESMS') in place and has designated staff members with overall responsibility for implementation of the ESMS. For this particular project, IFC's applicable requirements will be to ensure that all eligible projects in asset class are screened against the IFC Exclusion List, and the applicable environmental and social national laws and regulations. In addition, Garanti Romania will continue to comply with the requirements of IFC's PS2 on Labor and Working conditions.

Contacts

For Inquiries About the Project, Contact

Garanti Bank Romania
Adnan Ayman
Head of Financial Institutions
+40 21 208 9281
romaniafinancialinstiutions@garantibank.ro
Novo Park 3 Business CenterF Building, 5th Floor, BucharestDistrict 2, Romania
http://www.garanti.ro/

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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 Title & Description	Anticipated Completion Date
Provide E&S Due Diligence records to IFC from the asset class	12/20/2017
Provide E&S Monitoring records to IFC from the asset class	12/20/2017
Staff Training	12/20/2017
Provide updated information on HR practices in line with IFC Performance Standard 2: Labor and Working Conditions	12/20/2017

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