The European Investment Bank today signed two loans for a total amount of EUR 150 million in support of small and medium-sized enterprises (SMEs) in Turkey. The two EIB loans of EUR 75 million each went to Akbank and Halk Bank. They consist of a combination of EIB funds (80%) and European Union grants (20%) for onlending concessional financing to smaller Turkish companies. The loans reflect the common goal of the EIB and the EU to support these companies as part of an integrated European response in favour of Turkish SMEs whose funding prospects have become more vulnerable given the impact of the global economic crisis. The financing is put in place in cooperation with the Turkish Treasury.
EIB Vice-President Matthias Kollatz-Ahnen said on the occasion today: “As the European Union’s bank, we are keen to confirm once more our substantial, swift and strong support to Turkey, which remains the largest recipient country of EIB financing outside the EU. Our support for the country’s SMEs has reached EUR 2.5 billion via 14 operations in the last two years. Today, we are reaching a qualitative milestone through an innovative structure for SMEs in cooperation with the EU Commission. This groundbreaking operation drives borrowing costs for SMEs further down through a mixture of the attractive conditions of the EIB loans and EU interest-free funds. Lower costs and longer loan tenors will increase the resilience of the companies and improve the affordability of their investments to cope with the negative consequences of the global crisis. The expected economic benefits of our support are significant in terms of job maintenance and private sector development in Turkey as SMEs – with 1.9 million companies – is the largest sector of the Turkish economy and constitutes the largest provider of employment. This operation is fully in line with EIB strategy for 2010, whereby SMEs will once more remain a priority for the EIB, as their access to finance remains difficult while their impact on economic recovery and jobs is high.”
Ambassador H.E. Mr Marc Pierini, Head of the EU Delegation to Turkey, remarked: “Turkey and the EU need to sustain economic growth with more jobs and greater social cohesion. They need to build on the joint economic achievements of the Customs Union, a success story that has tripled bilateral trade to EUR 100 billion. Two thirds of all foreign direct investment to Turkey comes from the EU, which has enabled a remarkable degree of integration of both economies in terms of production, markets and supply chain. Leading EU companies employ hundreds of SMEs as sub-contractors in Turkey. SMEs obviously have problems in gaining access to finance and the recent economic crisis has made the situation more difficult for them. The EU has been supporting several initiatives to improve access to finance for small businesses in Turkey by working together with financial institutions such as the EIB. With such initiatives ranging from loan programmes to credit guarantee schemes and venture capital funds, the EU supports Turkish SMEs with a total financing envelope of approximately EUR 1.2 billion in 2010. Such a substantial effort is warranted by the current conditions of the global economy and the need to support growth and preserve jobs. The SME recovery support loan programme that we are launching today is part of this effort and I hope it will contribute to achieving this shared objective.”
Ms Hülya Kefeli, Executive Vice President of International Banking, Akbank stated: “We are proud to be the only private bank chosen to partner the EIB and the EU Commission in the SME Recovery Loan Facility. Working collectively with the EIB since 2006, we continue to support the local economy by extending our collaboration through various EIB projects totalling approximately USD 1 billion and hope that our partnership will continue to flourish in the near future. Akbank’s participation in such loan programmes, which include terms concerning the protection of the environment, underscores the bank’s corporate social responsibility policy and its firm commitment to help sustain environmentally sound economies. The SME Recovery Support Loan enhances Akbank’s efforts to reach out to SMEs in their recovery period and strengthen the Turkish economic structure. Furthermore, the possibility to disburse the loan in TRY will be of great convenience to SMEs keen to limit their currency risk exposure and reduce their vulnerability to economic fluctuations even further. Our robust and extensive branch network together with Akbank’s qualified employees specialising in SME finance will be key to addressing the specific needs of SMEs in the sectors impacted most by the economic turmoil and to supporting their recovery projects through the provision of the most advantageous finance opportunities. We would also like to take this opportunity to thank the EIB and the EU Commission for their continuing support to the Turkish economy.”
Mr Hüseyin AYDIN, General Manager of Halk Bank, commented: “Extending loans with terms compatible to the needs of SMEs is just as important as facilitating their access to financial resources. In this respect, Halkbank values highly its cooperation with the European Investment Bank (EIB). Since 2001, Halkbank has signed six protocols with the EIB, acquiring resources totalling EUR 540 million. Almost a thousand SMEs have benefited from these EIB programmes, and right now we have 485 companies as active customers. The instalment payments made by our customers are reallocated under EIB terms to enable even more companies to benefit from EIB sources of finance. With the protocol signed today, the fund volume has reached EUR 615 million. 20% of the loan will be interest-free without security in cooperation with the EU Commission, which is appreciated. Moreover, the opportunity to disburse the loan in TRY is an advantage for non-exporter SMEs and SMEs that are not eager to bear currency risk. While contributing to the product diversification of our bank, the fund is an attractive loan for SMEs with its funding advantage supported by the EU Commission. In conclusion, the loan opens a new door for SMEs to access financial resources. We contend that by duly executing our SME banking mission, Halkbank will provide more productive solutions to SMEs seeking funds by transferring these resources. In line with our 72 years’ experience in SME banking and the trust we have built up in the markets, Halkbank will continue cooperating with international financial institutions in the future.”
Both banks are long-standing EIB partners and are amongst the leading banks in Turkey with extensive branch networks and wide SME portfolios in the country.
These EIB loans are designed to support SME investment in tangible or intangible fixed assets, as well as working capital. Investment can be for new projects, or the modernisation/expansion of existing businesses, mainly in the manufacturing industry, agribusiness, hotel, tourism, energy, environment, construction, trade, retail, services, health and education.
The EIB’s involvement is expected to generate positive effects for the underlying investments in view of the availability of longer maturities, lower financing costs and improved conditions for enterprises. Simpler and more flexible, this new lending arrangement will enable EIB partner banks Akbank and Halk Bank to finance all types of investment or expenditure required to grow businesses with fewer than 250 employees, whether in the form of tangible or intangible investment or working capital.
Note to editors:
About the EIB
What is the EIB?
The European Investment Bank was created by the Treaty of Rome in 1958 as the long-term lending bank of the European Union. The Bank’s remit is to contribute towards the integration, balanced development and economic and social cohesion of the EU Member States. The EIB raises substantial volumes of funds on the capital markets which it lends on favourable terms to projects furthering EU policy objectives. The EIB continuously adapts its activity to developments in EU policies.
- enjoys its own legal personality and financial autonomy within the EU
- operates in accordance with strict banking practice and in close collaboration with the wider banking community, both when borrowing on the capital markets and when financing capital projects.
Who are the shareholders?
The EIB's capital is owned by the 27 member countries of the EU. France, Germany, Italy and the United Kingdom each have 16.2%, followed by Spain, with just over 9%.
What types of project does it finance?
There are six financing priorities, which are laid down by the shareholders and the EU mainly in the following sectors:
- convergence and cohesion, involving the poorest regions of the EU
- small and medium-sized enterprises
- research, development and innovation
- environmental protection
- Total financing operations: EUR 79 billion (+37%, compared with EUR 58 billion in 2008) of which:
- EU countries: EUR 71 billion
- Accession countries: EUR 4.3 billion
- Neighbourhood and specific Mandates: EUR 3.7 billion
- Total raised by issuing bonds on the international markets in 2009: EUR 79.4 billion (EUR 59.5 billion in 2008) via 262 transactions (247 in 2008).
Key figures: the EIB in 2009
Lending for SMEs
One of the EIB Group’s top operational priorities is to support the investments of small and medium-sized enterprises (SMEs), the engine of Europe’s economy. Well before the crisis erupted, the EIB undertook a wide-ranging consultation of SME market players enabling it to develop a new lending product, dubbed EIB loans for SMEs. Available since October 2008 and channelled through commercial banks, these new loans are simpler, more flexible and more transparent, making it possible to reach a greater number of European SMEs.
With a total of EUR 20.8bn signed with intermediary banks during 2008 and 2009, the EIB is well on its way to delivering on its target of lending EUR 30bn to SMEs between 2008 and 2011, a target set in the European Economic Recovery Plan that was adopted by the Heads of State and Government in December 2008.
EIB activity in Turkey
The EIB, as the European Union’s Bank is the long-standing, solid partner of Turkey (with over 40 years of operations) offering broad experience with public and private investments in all key sectors.
In 2009, the EIB provided total lending of EUR 2.6 billion, which is well above the non-crisis level of EUR 2 billion per year. The Bank reinforced its activity in terms of the three pillars that have been set as strategic objectives: (i) financing of infrastructure, both at national level and in favour of local authorities, (ii) supporting SMEs through credit lines with a number of banking partners, and (iii) financing of the corporate sector, especially in favour of energy and renewables as well as foreign direct investment.
In 2009, the Bank’s activity in Turkey was weighted in favour of SMEs. The Bank acted boldly with a total of EUR 1.5 billion to ease SME funding constraints in the country during the crisis. This action was made possible through the close cooperation and synergy that the Bank established with its Turkish financial intermediaries.
Continued support to major economic infrastructure, mainly in transport and energy, was another EIB priority during the crisis period, targeting growth leverage and increased quality of life for people. In 2009, EIB extended EUR 293 million in favour of the country’s main railway transport corridor between Ankara and Istanbul. This new loan brought total EIB funding for this flagship High Speed Railway Line project to EUR 850 million.
The Bank provided a total of EUR 460 million in support of energy projects, demonstrating strong backing for the country’s energy development potential and needs. The lending targeted critical sub-sectors including electricity distribution, energy efficiency and renewable energy. The Bank received the distinction of being nominated European Onshore Wind Project Finance Magazine Deal of the Year for a windpark project in Turkey.
The EIB also supported the strengthening of the country’s knowledge economy, in particular investments in R&D, education and training by providing a loan of EUR 335 million to the Turkish Higher Education Council to finance public sector research.
In addition to its existing activities, the EIB wishes to promote in 2010 the development of Public-Private Partnership models and to support economically weaker regions in Turkey with a combination of EU Commission grants and EIB loans for SMEs.