YKL is majority owned by Yapi Kredi Bank (YKB), which in turn is majority owned by Koc Financial Services (KFS). Yapi Kredi Bank is among the largest private commercial banks with total assets of around $42 billion, a capital base of $3.7 billion, and net income of $0.6 billion for the first nine months of 2007. Yapi Kredi Bank is 80% owned by KFS and the rest is publicly held. KFS is owned 50% by UniCredito of Italy (Bank Austria, a member of the UniCredito group, is expected to take over this equity holding as a result of a reorganization within the UCI Group) and 50% by Koc Group. Koc Holding is controlled and majority owned by the Koc family, Koc Trust and affiliates (78%). As of September 30, 2007 Koc Group's total asset size and total net worth were around $48 billion and $6 billion, respectively. YKL was established in 1987 and was part of the Cukurova Group until 2005. Koc Lease and YKL merged under the name of the latter on December 26, 2006, following the merger of the two parent banks (Koc Bank and Yapi Kredi Bank) under the name of Yapi Kredi Bank in 2006. YKL is the largest leasing company in Turkey with total assets of $1.9 billion as of September 30, 2007. The company reported a net income of $75 million (or 6.4% ROAA) for third quarter of 2007 vs. 8.2% ROAA for 2006.

Up to $50 million equivalent comprised of a senior loan.

50.0 million (USD)

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

* These investment figures are indicative

The company is headquartered in Istanbul and serves the whole country through its regional presence as well as sales people located in Yapi Kredi Bank branches spread out throughout Turkey.

The project is expected to have multiple development impacts, including: - Promoting EE Finance: IFC support in development of leasing financial products for energy efficient and renewable energy equipment will help the end users to find proper financing and to raise awareness. - Reduced Energy Consumption and Reduced Pollution: The leasing sub-projects are expected to reduce energy consumption for the relevant industries i.e. light industries (textile, printing, food), power and heat generation etc.) as well as in industrial and commercial buildings. Reduced energy consumption is a global priority, as well as important at the national level in the interest of reducing dependence on imported energy. Investments in energy efficiency offer a cost effective way to meet growing energy demand while reducing emissions. Benefits to environment will result from reducing pollution emissions (as a result of reduction of energy use and materials). Reduced pollution may result in improved health and living-environment quality for those in the vicinity of the plants. Reduced pollution, particularly CO2, will also contribute to efforts to mitigate the effects of global warming. - Increasing Access to Finance for SMEs: This project will help expand SMEs’ access to critically-needed term finance for non-EE projects as well. Leasing companies have traditionally been one of the key providers of term finance for SMEs, and this project will help make term finance available to more SMEs by working with an SME-focused leasing company.

IFC is providing longer term funding to support leasing companies’ reach into the SME market. Long term funding is still lacking from market sources even for the more reputed leasing companies such as YKL. IFC is helping to promote and catalyze energy efficiency as a distinct market segment that the Turkish financial sector should recognize and cater to. In Turkey, EE finance is a relatively new and under-developed sector. With a decade of experience in EE financing, IFC is in a strong position to leverage its global knowledge to help establish a successful EE financing model in Turkey through the cooperation with KfW. The proposed advisory services (AS) package will help YKL develop energy efficiency financing products as well as to recognize and monitor these leases separately. Through a tailored AS, IFC will help the company develop and introduce a new product to the market and will support YKL’s efforts in extending its client base and diversifying its loan portfolio by increasing the share of retail clients. IFC’s mobilization impact is demonstrated through KfW’s involvement to further support EE lease portfolio of the company.

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.

During appraisal, IFC will analyze the FI portfolio, and the activities proposed to be supported with IFC financing for types of transactions, size, tenor, and industry sectors and determine the Applicable Performance Requirements, if any, that would include a combination of:

- The IFC FI Exclusion List; and/or
- The applicable National Social and Environmental Laws and regulations. IFC will also review, if required, the capacity of the FI to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in the SEMS.

Based on the review, the project will be required to:

- Develop and/or upgrade, if necessary, any existing SEMS, prior to disbursement to the satisfaction of IFC;
- Identify responsible, qualified persons to manage and implement the SEMS;
- Commit to implement the SEMS, to ensure that its investments/activities supported by IFC financing are in compliance with the Applicable Performance Requirements;
- Submit a periodic report to IFC as per a format to be provided by IFC.