44119 - WCS COVID Abank

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Summary of Investment Information

Project Number

44119

Company Name

ALTERNATIFBANK ANONIM SIRKETI

Date SPI Disclosed

Aug 21, 2020

Country

Turkiye

Region

Central Asia and Turkiye

Projected Board Date

Aug 7, 2020

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Nov 20, 2022

Department

Regional Industry FIG MCT

Industry

Financial Markets

Previous Events

Approved : Aug 7, 2020
Signed : Sep 18, 2020
Invested : Oct 5, 2020

Sector

Commercial Banking - Trade and Supply Chain

Project Description

The proposed investment consists of a one-year, renewable senior loan of up to US$25 million to Alternatif Bank under the FIG COVID-19 Emergency Response WCS Envelope (WCS Envelope). The WCS Envelope is designed to provide funding to existing IFC client banks in emerging markets that will then extend new trade-related or working capital loans to companies whose cash flows have been disrupted by the global outbreak of the coronavirus pandemic. In line with the banking sector in Turkey, the COVID-19 crisis is expected to impact Alternatif Bank’s asset quality negatively through the challenges faced by SMEs, including hardship in finding liquidity to service their debt. Proposed short term facility will alleviate the pressure on short term cash requirements for SMEs as well as help them to sustain current employment levels by providing them financing for working capital needs. Alternatif Bank with its presence and expertise in SME segment and its branch network covering the whole country is a well-suited partner for IFC to reach out to SMEs during this crisis.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	25.0
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 SME Borrowers

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

Development Impact

Additionality is driven by IFC's counter-cyclical role during crises, especially at a time when other lending institutions or investors' appetite may be subdued. Therefore, IFC's additionality arises from its unique ability to deploy at scale, in terms of volume as well as geographic reach, through its (i) successful experience in rapid crisis response; (ii) extensive client bank and partner networks; and (iii) set of programs aimed at investing both large scale, transactional liquidity and working capital in emerging markets.

E&S Category Rationale / Risks and Mitigation

The Project has been categorized as FI-2 in accordance with IFC’s Sustainability Policy. The key sectors in Alternatif Bank’s SME portfolio are low-medium risk activities such as small-scale manufacturing, trade, services, construction, utilities, transportation, farming, health care and social services. Most of the portfolio to be supported through this project is expected to have potential limited adverse environmental or social risks or potential impacts that are few in number, generally site specific, largely reversible, and can be readily addressed through mitigation measures. Given the nature of this investment, 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. Applicable E&S requirements for this investment will be IFC Exclusion List and the national environmental and social laws and regulations. In addition, the Bank will continue to comply with Life & Fire safety requirements and the requirements of IFC’s Performance Standard 2 on Labor and Working conditions.

The key E&S risks and impacts derive from Alternatif Bank’s capacity to identify and manage the potential environmental and social risks associated with its lending activities to SMEs.

Summary of Client Environmental and Social Management System (ESMS)

Alternatif Bank has established and operated a satisfactory ESMS, which covers the SME asset class and is equipped with necessary tools for E&S risks assessment. The bank will continue retaining proper 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.

Contacts

For Inquiries About the Project, Contact

Alternatifbank A.S.
Ahmet Kinalisoy
Structured Finance Manager
+90 212 315 70 96
ahmet.kinalisoy@alternatifbank.com.tr
Vadistanbul Bulvar, Ayazaga Mah. Cendere Cad. No: 109M 2D Blok 34485 Sariyer / Istanbul
alternatifbank.com.tr

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IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

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CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

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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