Sekerbank is a mid-tier Turkish bank established in 1953. Although the Bank has expanded and diversified its products and client base, its traditional area of strength remains SME lending. Currently, the Bank employs over 3,649 staff and has 266 branches in Turkey including in rural areas of Turkey. Around 68% of Sekerbank shares are controlled by its Employee Voluntary Pension Fund and Kazakhstan's BTA Securities JSC, a 100% subsidiary of BTA Bank JSC, on an equal basis. The rest of bank’s shares are publicly traded on the Istanbul Stock Exchange.

The total project cost is estimated at $200 million equivalent. Sekerbank is expected to issue covered bonds in the domestic or international bond market to IFC and other international finance institutions as well as private investors. IFC’s investment would amount approximately $25 million.

25.0 million (USD)

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

* These investment figures are indicative

Sekerbank headquartered in Istanbul and has over 260 branches across Turkey. Investments can be made throughout the country.

Open and create a covered bond market in Turkey and allow banks to raise long-term funding from domestic and international investors in order to finance SME's and other projects.

- Play the role of a lead investor and provide a signaling effect that could help attract other investors - Leverage IFC's experience in structuring bond issues and completing market-first transactions. Add value by structuring the covered bond based on best-practice / international standards to improve protection for investors.

This project, which consists of the purchase of a bond issued by Sekerbank to be used for on-lending to SMEs, has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. IFC''s existing investment in Sekerbank consists of two senior loans for on-lending to MSMEs and to farmers and agribusiness companies, a trade line under GTFP, and a 5-percent ownership of Sekerbank''s shares. After some initial delays, Sekerbank has implemented a Social & Environmental Management System (SEMS) to screen onlending to SMEs and agribusiness against the IFC Exclusion List, and applicable environmental and social national laws and regulations. Following IFC''s equity investment, Sekerbank is in the process of revising the SEMS to apply the IFC Performance Standards to high-risk transactions. Sekerbank''s portfolio currently includes minor exposure (0,092%) to activities on the Exclusion List (0.026% to the defense industry, 0.034% to tobacco and 0.032% to alcoholic beverages). Sekerbank is in the process of developing a plan to reduce/phase out these exposures. Based on the last AEPR review for FY09, the environmental and social risk score is 2 and Sekerbank''s overall E&S performance is medium.

For this particular project, IFC''s applicable requirements will be to ensure that loans to SMEs are screened against the IFC Exclusion List, and applicable environmental and social national laws and regulations. IFC''s appraisal will focus on Sekerbank''s ongoing implementation of the SEMS in particular progress made with respect to compiling applicable social and environmental regulations, internal training, roll out across the bank''s branches, and senior management approval."