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 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.