42871 - Garanti Impact Region

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Summary of Investment Information

Project Number

42871

Company Name

TURKIYE GARANTI BANKASI AS

Date SPI Disclosed

Jan 8, 2020

Country

Turkiye

Region

Central Asia and Turkiye

Projected Board Date

Sep 19, 2019

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Jun 12, 2021

Department

Regional Industry - FIG - ECA

Industry

Financial Markets

Previous Events

Approved : Sep 19, 2019
Signed : Dec 24, 2019
Invested : Jan 8, 2020

Sector

Commercial Banking - General

Project Description

The proposed financing package involves an (i) up to US$50 million A Loan from IFC’s own accounts; (ii) a B1 Loan of up to US$22 million; and an additional (iii) up to US$18.75 million Trust Loan from IFC acting as in its capacity as implementing entity for the Managed Co-Lending Portfolio Program to Türkiye Garanti Bankasi A.S. (“Garanti BBVA”), which is a systematically important Turkish bank headquartered in Istanbul (the “Project”).

The tenor of the financing package is six-years with two-year grace and proceeds of the investment will be used to support small enterprises located in the southeastern and eastern provinces of Turkey with a high presence of Syrians under Temporary Protection (“SuTP”) with the aim to contribute to the sustainable development of the country.

Associated Advisory Engagement

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	140.0
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 MSME (mix of Micro and SME)

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

Development Impact

1. Increased access to finance for small enterprises: The proposed investment will increase access to finance to small enterprises with a special focus on regions that are the most affected by the SuTP influx. 2. Inclusiveness: IFC anticipates that the investment will foster financial inclusiveness by demonstrating to other industry players the need and commercial viability of expanding credit in less developed regions

1. Financing structure: The proposed investment will avail funding with six-year tenor and two-year grace period, a maturity profile that is not readily available in the Turkish market. IFC anticipates that provision of long-term funds to Garanti BBVA will facilitate small enterprises' reach in long-term financing; 2. Resource Mobilization: The proposed investment is expected to facilitate mobilization through MCPP and potentially through other investors, which will help Garanti BBVA further diversify its funding base. IFC anticipates that its countercyclical role and continued commitment in the systematically important banks in Turkey, especially during volatile economic times.

E&S Category Rationale / Risks and Mitigation

The Project is to support financing of small enterprises in 22 provinces of Turkey with a high presence of SuTP by Garanti BBVA. The key sectors in Garanti BBVA’s SME portfolio are low-medium risk activities such as construction, trade, services, agriculture and textile. Most of the portfolio to be supported through this Project is expected to have potential limited adverse environmental or social risks or impacts that are few in number, generally site specific, largely reversible, and can be readily addressed through mitigation measures. The Project will not support coal-related and higher risk activities involving a) involuntary resettlement, b) risk of adverse impacts on Indigenous Peoples, c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage or d) significant occupational health and safety risks. The Project has been categorized as FI-2 in accordance with IFC’s Sustainability Policy. According to the nature of IFC's investment and Garanti BBVA’s operations, the applicable E&S requirements for this investment will be IFC Exclusion List and the national environmental and social laws and regulations. In addition, Garanti BBVA will comply with the requirements of IFC’s Performance Standard 2 on Labor and Working conditions.

The key E&S risks and impacts derive from Garanti BBVA’s capacity to identify and manage the potential environmental and social risks associated with its lending activities to small enterprises in those provinces with a high presence of SuTP. As an existing IFC client, Garanti BBVA has established ESMS in compliance with IFC’s applicable requirements applied to women-owned small enterprises. As part of this investment Garanti BBVA will upgrade the ESMS and expand the implementation to small enterprises operating in provinces affected by the SuTP influx. Garanti BBVA will continue on retaining proper internal capacity, providing E&S training to the relevant staff including the ESMS officer, and its commitment to manage HR and labor related risks in compliance with requirements of IFC Performance Standard 2 Labor and Working Conditions.

Task Title & Description	Anticipated Completion Date
Staff Training	12/04/2021
Ensure compliance with the E&S Requirements for the eligible portfolio projects originated after November 1, 2018	12/15/2019
Provide ESMS implementation plan	01/14/2020
Upgrade ESMS Procedure	12/14/2020
Expand application of ESMS procedure to the entire SMEs segment	12/04/2021
ESMS Implementation and implementation records	02/02/2022
Prepare staff ESMS training plan	01/14/2020

Contacts

For Inquiries About the Project, Contact

Türkiye Garanti Bankasi A.S.
Mr. Deniz Caner Kurt
Supervisor
+90 (212) 318 17 32
canerkurt@garantibbva.com.tr
Nispetiye Mah. Aytar Cad. No. 2 Levent Besiktas Istanbul
www.garantibbva.com.tr

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