The European Investment Bank (EIB), the financing institution of the European Union, has signed a global loan of EUR 100 million with finance institutions Koçbank A.S. and Koç Finansal Kiralama A.S. for the funding of small and medium sized projects in Turkey in the form of either loans or leases.

The two local intermediaries who are owned by Koç Financial Services, a 50:50 joint venture between Turkey's Koç Group and Italy's Unicredito, have a specific focus on SME customers.

The loan will be distributed across the whole of the region to finance projects in the industry, tourism and services sectors, especially those with an export orientation.

Wolfgang Roth, Vice-President of the European Investment Bank, said his bank shall broaden the available sources of financing and decrease barriers to access financing for small and medium-sized enterprises, which have a crucial role for the entire economy.

Similar EIB global loans granted recently have been fully allocated within a few months of contract signature. This operation will contribute significantly to the development of the domestic banking sector in Turkey, as well as creating additional employment and earning much needed foreign currency for the local economy.

This is one of the first agreements to be signed in Turkey to involve leasing, a developing concept in the country, but one which is seen to provide an ideal form of longer-term financing for smaller SMEs. The financing is in conformity with EU policies for regional and SME development and highlights the continued commitment of the EIB in support of Turkey's EU Accession objectives. Global loans are credit lines to financial intermediaries - EIB partner banks that on-lend EIB funds under their own management, at their own risk and on their own conditions but which should benefit from the EIB's favourable lending conditions. This type of lending is used by the EIB to finance small and medium-sized projects involving a total investment in excess of EUR 40 000 but lower than EUR 25 million.

The Bank has committed since 2000 some EUR 1 billion for financing SMEs, which have been disbursed by local banks and leasing companies. Its cumulative financing in Turkey stands at EUR 4 billion and relates to investments in a wide range of economic sectors.