24475 - Finans Lease AS

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Summary of Proposed Investment

Project Number

24475

Company Name

QNB FINANSAL KIRALAMA ANONIM SIRKETI

Date SPI Disclosed

Jan 4, 2006

Country

Turkiye

Industry

Financial Markets

Projected Board Date

Feb 6, 2006

Status

Completed

Sector

Leasing Services

Department

Global Industry, Financial Markets

Environmental Category

Previous Events

Approved : Jun 12, 2006
Signed : Jun 21, 2006
Invested : Dec 27, 2006

Project Description

Established in 1990, Finans Leasing (FL or the company) is the fourth largest leasing company in Turkey in terms of total volume of investments financed as well as the total number of contracts handled in the first three quarters of 2005, is listed on the Istanbul Stock Exchange (ISE). 51.04% of the company is owned by Finansbank, 8.21% owned by FinansInvest, and 40.75% by the public. FL is headquartered in Istanbul with a market share of 6.23%. As of September 2005 on a consolidated basis, FL had total assets of $313 million equivalent, equity of $120 million equivalent. Net leasing receivables of $188.6 million, and net income of $27.8 million. Leasing volumes in 3Q/05 was $181 million.

FL intends to utilize the facility mainly to finance small and medium sized enterprises (SMEs). The main objective of the project is to provide critically lacking long term lending to Turkey’s private SME sector.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	24.06
Equity

Development Impact

Development Impact:
Leasing is an effective alternative source of financing to bank loans as it provides businesses with access to equipment for a relatively small up front investment and requires less collaterals compared to bank credits. This can be vital to SMEs with a few assets, and hence limited capacity to secure bank loans for fund business operations. Access to and availability of capital remains a major constraint to SMEs in Turkey. The proposed leasing facility will improve SMEs access to much needed capital while providing funding flexibility. It will also help achieve broader goals of encouraging financial sector diversification The impact indicators used to measure this will most likely be number and volume of SME leases approved, and the average size of leases.

Fit With World Bank Group Strategy and IFC Role:

The key structural and social elements of Turkey’s new economic reform program are the following:

- a strong focus on public sector reform
- establishment of a sound banking sector
- liberalization of markets for private sector led growth

The Bank’s strategic objective is to help Turkey implement fundamental reforms to reduce economic vulnerability and achieve high and stable growth, and continue the process of addressing long neglected social and environmental problems. The current Country Assistance Strategy aims at reducing the risk of reemergence of crisis and helping Turkey address the many challenges of preparing for EU membership. IFC’s strategy and program fully supports the strategic objectives of the Bank in Turkey. In the financial sector, IFC has been working with mid-sized banks to strengthen their capital structure and balance sheets, and to develop new products such as the leasing industry.

IFC has played a major role in developing the Turkish leasing industry since the mid 1980s when it assisted the drafting of Turkey’s leasing legislation and sponsored the establishment of IGFK, a joint venture leasing company. IFC has also made loans to the following leasing companies: Lending to leasing companies will help IFC meet two important objectives:

- providing financing to SMEs and
- encouraging financial sector diversification.

IFC’s role will also be to:
- alleviate the MT funding constraint for Turkish leasing companies and SME clients and
- contribute towards private sector led growth.

Contacts

For Inquiries About the Project, Contact

Ms. Elif Rumani
Group Manager, Finance Department
Nispetiye Caddesi, Akmerkez B Kulesi,
Kat:10, Etiler 34620
Istanbul, Turkey

Telephone Number +90-212-282 1039
Fax Number +90-212-282 1040/41

This Summary of Project Information (SPI) is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC's activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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