Turkey: VakifBank Climate Transition and Reconstruction Facility

proposed

A sovereign-backed multi-sector on-lending facility of up to USD300 million to Turkey Vakıflar Bankası T.A.O. (VakifBank) (the Facility) with two components: (i) Component A: Post-earthquake reconstruction, Affordable Housing and Social Infrastructure, and (ii) Component B: Climate Finance. Component A consists of a loan of up to USD200 million to support Turkey's post-earthquake reconstruction efforts through the financing of affordable residential housing and social infrastructure facilities in 11 regions affected by the 2023 disaster. Affordable housing will benefit low-income families and households and in compliance with standards for earthquake resilience and structural integrity set by the Housing Development Administration of Turkey (Toplu Konut İdaresi Başkanlığı, or TOKI). Residential buildings financed from the proceeds of the facility will conform to the standards of green affordable housing under the relevant energy performance certifications. The loan will also support the construction of social infrastructure such as educational facilities and healthcare facilities, with emphasis on low-income areas and underserved groups. The buildings conform to standards of earthquake and climate resilience and energy efficiency and promote the introduction of digitalization to the health and educational services. Component B consists of a loan of up to USD 100 million to support climate mitigation and adaptation investments by the private sector, specifically small and medium enterprises (SMEs), according to a definition to be agreed between the Borrower and the Bank. Eligible investments may include renewable energy generation, battery energy storage systems (BESS), as well as demand-side solutions that reduce the consumption and waste of energy in buildings. Adaptation investments will enhance the resilience and resource efficiency of production processes, equipment, buildings and infrastructure. The facility will include investments that promote environmental sustainability and mitigate impacts. VakifBank is a prominent Turkish bank established in 1954 with the mission of utilizing the foundation (vakıf)'s assets to contribute to Turkey's economic development. The bank's ownership structure includes 74.79% held by the Turkey Wea�lth Fund (Group D), 14.75% by the Republic of Turkey Ministry of Treasury and Finance (Group A and B), 4.06% by the VakifBank Pension Fund (Group C), and the remaining 6.35% as free float (Group D). Headquartered in Istanbul, VakifBank operates a network of branches across Turkey, providing a comprehensive range of services including corporate, commercial, and retail banking, as well as investment and private banking services. The bank also has international branches in New York, Bahrain, Erbil, and Qatar, extending its services globally. As of March 31, 2025, VakifBank reported total assets of approximately TL 4.2 trillion (around USD 260 billion), total loans of TL 3 trillion (USD 186 billion), and net income of TL 20.03 billion (USD 1.24 billion) for the first quarter. VakifBank is Turkey's second-largest bank by total assets and continues to play a central role in supporting the country's economic development and sustainability goals