Turkey - EU/EBRD MSME Finance Facility

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The EBRD is considering providing up to €150 million in senior loans to leading commercial banks in Turkey for on-lending to micro, small and medium-sized enterprises (MSMEs) under the Turkish MSME Financing Facility. The purpose of the project is to enable the banks to expand their portfolio of MSME loans in the economically less developed regions in the South East and East of Turkey and for specific sectors (e.g. agriculture, women entrepreneurs) where access to credit is limited. The EBRD’s financing will also assist the banks in diversifying and lengthening their funding base. Transition impact will arise through market expansion which will be achieved by providing medium and long term financing through these leading banks to accelerate and expand their lending in economically less developed regions and for specific sectors and purposes (e.g., small agriculture and women entrepreneurship) and extend the loan maturities and reduce the average size of MSME sub-loans using their large distribution networks. Subject to market conditions, the EBRD will endeavour to maximize the extent to which these operations are undertaken through local currency loans and/or syndicated / co-financed facilities. Clients of the facility will be commercial banks in Turkey. It is planned that clients will be selected from leading commercial banks with extensive outreach in the less developed regions of the country and the institutional capacity and commitment to expand MSME financing. €150 million in senior loans, including syndication/co-financing where possible. Up to €150 million. Categorised FI (2008). All Participating Banks (PBs) will be required to comply with the EBRD's Performance Requirements for FIs (specifically, PR2 and 9) and adhere to the EBRD's Environmental and Social Exclusion and Referral Lists and submit Annual Environmental and Social Reports to the EBRD. All PBs will be required to implement EBRD's Environmental and Social Procedures for Small and Micro Loans as outlined in the e-manual. Up to €15 million provided by EU in support of the Turkey Private Sector Support Facility - MSME Finance window. The funds will be used to provide a first-loss risk cushion in support of an expansion of MSME lending meeting certain eligibility criteria. Up to €6 million in TC funds for capacity building to increase and expand the MSME portfolios of the PBs in the economically depressed regions of the South East and East of Turkey. TC support is required to support PBs in expanding their MSME financing to new areas and to develop new products for the target group, particularly in under-banked regions bordering Iraq and Armenia. The US is considering providing $3 million in TC funds for this purpose. Pak Oksana E-mail: pako@ebrd.com