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| Summary of Project Information (SPI) |
| This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
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| Project number | 24109 |
| Project name | TEB IV Sub Loan |
| Country | Turkey |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | Türk Ekonomi Bankasi A.S. |
| Environmental category | FI-1 |
| Date SPI disclosed | May 6, 2005 |
| Projected board date | June 16, 2005 |
| Status | Active |
| Previous Events | Invested: June 29, 2005
Signed: June 27, 2005
Approved: June 16, 2005 |
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| Description of company and purpose of project |
TEB is a medium size bank having 93 branches and employing over 2,200 people. The Bank is a conservatively run, high quality bank with total assets of $2.67 billion equivalent and shareholders’ equity of $295 million equivalent as of end December 2004. In February 2005 BNPP and Colakoglu family agreed to have 50% ownership in TEB Mali that is 84% owner of TEB. Following the strategic investor coming in, TEB’s strategy will be focused on expanding its retail operations and increasing its SME lending operations.
TEB is an existing client and this is IFC’s fourth project with the Bank. IFC’s investment aims to support Tier 2 capital of the Bank through a subordinated loan of up to $50 million. |
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| Project sponsor and major shareholders of project company |
The project sponsor is TEB Mali, the financial holding company, that owns 84% of TEB, that used to be owned privately by members of Colakoglu family and is now owned equally by the Colakoglu Group and BNP Paribas (50% stake each) since February 2005.
The Colakoglu Group has operations in production of steel, production of containers, trading, shipping, power generation and banking. Like TEB itself, the Colakoglu Group has a reputation of conservative management and is known for treading cautiously into new business areas and for having low leverage.
16% of the Bank’s shares are publicly traded in Istanbul Stock Exchange since February 2000. |
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| Total project cost and proposed IFC investment |
| The total project cost is estimated at $50 million. The proposed IFC investment is up to $50 million C loan to be qualified as Tier 2 capital of TEB. |
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| Location of project and description of site |
| TEB is headquartered in Istanbul, Turkey with 92 branches and an off shore branch in Bahrain. Throughout its relatively wide branch network investments can be made within a wide geographical area. |
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| Project Development Impact and IFC's Role |
Development Impact
TEB has contributed to the progress and development of the private sector in Turkey through the IFC funding it has obtained in 1996, 1998, and 2002. Investment is timely as IFC steps in together with the strategic investor, BNPP, that sends a strong message to other potential investors that they would have the support of IFC when investing in emerging markets. The development impact of this project would further include:
- providing term funding to Turkish corporates at a time when term funding is particularly scarce,
- sending an important signal of support to the system at a time when confidence is weak and banking activity is severely constrained due to newly introduced strict capital adequacy requirements, and
- strengthening TEB’s capital structure and balance sheet and enabling it to expand its financial intermediation capacity.
Fit With World Bank Group Strategy and IFC Role
The key structural and social elements of the new economic program of Turkey are:
- focus on public sector reform;
- establishment of a sound banking sector;
- liberalization of markets for private-sector-led growth; and
- special emphasis on strengthening social assistance to help people that were adversely affected by the economic crisis.
The main objective of the World Bank Group is to lay the basis for sustained long-term growth and to reduce economic vulnerability while supporting Turkey’s economy. To achieve this objective, Bank Group efforts are strongly focused on:
- supporting banking and public sector reform;
- strengthening the country’s social protection system;
- assisting private sector development; and
- continuing the Bank’s long-term support to programs in education, health, community-based watershed management and community development and heritage.
IFC’s country strategy is aimed to work closely with the Bank to support Turkey’s economic reform. IFC’s financing and other assistance will focus on the financial sector, restructurings, re-capitalization of portfolio companies, privatizations and support to firms with good export prospects that can contribute to economic recovery. In the financial sector, IFC is working to provide credit lines to local banks to support the private sector, especially SMEs. |
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| Environmental and social issues - Category FI-1 |
IFC will coordinate with the company to:
- review the existing IFC approved Environmental Management System (EMS) and agree on areas for improvement based on past experiences;
- review the need for additional training and capacity building for company staff, particularly credit officers, in the area of Environmental Risk Management to ensure the efficient implementation of the EMS;
- ensure implementation of the EMS results in all subprojects complying with Turkish environmental, health and safety requirements as well as appropriate IFC requirements;
- ensure the company provides required annual environmental performance reports to IFC on compliance with the EMS.
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| To contact the project company, please write to: |
Mr. Levent Celebioglu, Director
Meclis- I Mebusan Cad. No. 35 Findikli 80040
Istanbul,Turkey
Telephone: +90(212) 251-2121 ext 1341
Fax: 90(212) 249 65-68
Email: lecelebioglu@teb.com.tr
Istanbul, Turkey |
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