44237 - WCS COVID Garant

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Summary of Investment Information

Project Number

44237

Company Name

TURKIYE GARANTI BANKASI AS

Date SPI Disclosed

May 19, 2020

Country

Turkiye

Region

Central Asia and Turkiye

Projected Board Date

May 14, 2020

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Oct 15, 2022

Department

Regional Industry FIG MCT

Industry

Financial Markets

Previous Events

Approved : May 14, 2020
Signed : May 18, 2020
Invested : May 20, 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$50 million to Garanti BBVA 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. The global effect of Covid-10 crisis is expected to be observed in Turkish banking sector, which Garanti BBVA is a part of, in line with the rest of the world due to its negative impact on MSMEs in finding liquidity to service their debt. Proposed short term facility will alleviate the pressure on short term cash requirements on MSMEs as well as help them to sustain current employment levels by providing them financing for working capital needs.

Associated Advisory Engagement

No advisory engagement with the proposed investment.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
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

By supporting Garanti BBVA's capacity to sustain operations during this acute shock, IFC best positions the private sector to support the economic recovery process, shortening the time it will take for the most vulnerable to return to their traditional income-earning opportunities. The project has an AIMM rating of Good based on a score of 53. The Project Outcome rating is Strong with High likelihood of achievement, which will be realized by providing access to finance/liquidity to Garanti BBVA and, through it, its customers). This will support stakeholders' capacity to sustain operations and to expedite post-crisis recovery. Specifically, this project intends to provide approximately US$150,000,000 of working capital and trade-related lending to 7,500 MSME clients. The Market Creation rating is Strong with Medium likelihood of achievement. Emerging Market banks provide working capital and trade finance to support their customers' operating cash flows. By sustaining banks' ability to provide these services, the project intends to promote the resilience of trade finance markets as well as broader stability that comes about by providing for the going concern of market participants in Turkey.

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 Garanti BBVA’s MSME portfolio are low-medium risk activities such as small-scale construction, trade, services, small-scale 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 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, 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 MSMEs.

Summary of Client Environmental and Social Management System (ESMS)

As an existing IFC client, Garanti BBVA has established ESMS and will be required to continue its application including implementation of the action plan within timeline agreed under the existing project that was signed on December 2019. 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.

Contacts

For Inquiries About the Project, Contact

Türkiye Garanti Bankasi A.S.
Mrs. Ilkay Pekdogan
Supervisor
+90 (212) 318 17 34
ilkaype@garantibbva.com.tr
Besiktas Istanbul
www.garantibbva.com.tr

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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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