By Olga Rosca
The European Bank for Reconstruction and Development (EBRD) is providing a new boost to Turkey’s banking sector amid the coronavirus pandemic with a US$55 million loan to Garanti BBVA, the second-largest private lender in the country. The funds will be channelled predominantly to Turkish small and medium-sized enterprises hit by the Covid-19 outbreak.
The EBRD financing is complemented by a US$ 50 million loan from the International Finance Corporation, a member of the World Bank Group.
EBRD Managing Director for Turkey, Arvid Tuerkner said: “We are pleased that Garanti BBVA will channel EBRD funds to companies that have been impacted during this period of volatility caused by the coronavirus outbreak. Getting financial help to businesses means keeping the economy going.”
Chief Executive Officer of Garanti BBVA, Recep Baştuğ added: “Thanks to the EBRD and IFC, we will be able to provide greater support to SMEs affected by the pandemic.”
In addition, Garanti BBVA has raised US$594 million from international commercial banks. For the first time, the financing will be linked to Garanti BBVA’s sustainability practices. As part of the syndication agreement, the bank is committing to no longer financing greenfield power plants, as well as sourcing 80 per cent of the electricity it consumes from renewable sources. Meeting or outperforming these targets will enable Garanti BBVA to obtain a margin benefit, while falling short of the commitments will lead to a penalty.
Baştuğ added: “Climate change remains an urgent issue and exacerbates the ongoing coronavirus outbreak. Once the health emergency is over, the “new normal” should focus on sustainability and Garanti BBVA is taking its commitments in this area one step further.”
The EBRD is a major investor in Turkey. Since 2009 it has invested €12.4 billion through 311 projects in various sectors of the country’s economy, with almost all investment in the private sector. The EBRD’s €7 billion portfolio in Turkey is the largest among the 38 economies where the Bank invests.