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| TEBTierILoan |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment 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. |
| Project number | 26158 |
| Company name | Türk Ekonomi Bankasi A.S. |
| Country | Turkey |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Active |
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| Date SPI disclosed | June 1, 2007 |
| Projected board date | July 5, 2007 |
| Previous Events | Invested: July 31, 2007
Signed: July 27, 2007
Approved: July 5, 2007 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| The proposed investment consists of a $100 million note which would qualify as Tier I capital under relevant Turkish banking regulations. The transaction would be the first of its kind in Turkey and would introduce a new capital instrument to the country that provides an innovative solution for banks to strengthen their capital structure. |
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| Project sponsor and major shareholders of project company |
Established in 1927, Türk Ekonomi Bankası (TEB) is a medium sized Turkish bank with a strong tradition of corporate banking, the financing of foreign trade and private banking. In recent years, it has also increasingly focused on retail and SME banking.
In addition to providing a variety of banking services to retail, SME, commercial and corporate clients through its rapidly expanding branch network, it is also active in securities brokerage, leasing, factoring, insurance and portfolio management through its subsidiaries and group companies.
TEB’s shares have been listed both on Istanbul Stock Exchange and London Stock Exchange since February 2000, and currently 15.75% of its shares are freely floating there. The remaining 84.25% is held by TEB Mali Yatirimlar A.S. (TEB Mali). Since February 2005, BNP Paribas of France holds 50% of TEB Mali, with the remaining 50% held by Colakoglu Group of Turkey. |
| Total project cost and amount and nature of IFC's investment |
| The proposed investment consists of a $100 million note which would qualify as Tier I capital under relevant Turkish banking regulations. |
| Location of project and description of site |
| TEB is headquartered in Istanbul, Turkey and has 215 branches throughout Turkey. |
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| Anticipated development impact of the project |
This investment is timely as IFC steps in to support the bank’s capital base allowing its continued lending growth. It also introduces an efficient capital strengthening solution to the country’s banking sector. The development impact of this investment would further include:
- creating a best practice example and supporting product innovation through IFC’s work on the new instrument;
- strengthening the bank’s capital structure and balance sheet and enabling it to expand its financial intermediation capacity, particularly to SMEs and households in a way that achieves the highest lending impact possible for each dollar of IFC investment. |
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| IFC's expected development contribution |
| IFC’s subordinated loan will strengthen the capital base of the bank. Also, IFC’s active role in the structuring and launching of a new capital instrument to Turkey assures best practice and lends credibility to help its acceptance by the market. The transaction sets an example that can be followed by other banks to optimize and diversify their capital sources, and enhance their lending capacity, particularly to the growing SME and retail segments. |
| Environmental and social issues - Category FI |
This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.
During appraisal, IFC will analyze the FI portfolio, for types of transactions, size, tenor and industry sectors and determine the Applicable Performance Requirements, if any, that would include a combination of:
- The IFC FI Exclusion List and/or,
- The applicable National Social and Environmental Laws and regulations and/or,
- The IFC Performance Standards.
While TEB is an existing IFC client, as this project is being reviewed under IFC's revised Environmental and Social Review Procedure IFC will also review, if required, TEB's capacity to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in the SEMS.
Based on the review, TEB will be required to:
- Upgrade if necessary, its existing SEMS, prior to disbursement to the satisfaction of IFC,
- Identify responsible, qualified persons to manage and implement the SEMS,
- Commit to implement the SEMS, to ensure that its investments/activities are in compliance with the Applicable Performance Requirements,
- Continue to submit a periodic report to IFC. |
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| For inquiries about the project, contact: |
Mr. Levent Celebioglu, Assistant General Manager, Financial Institutions
Meclis-i Mebusan Caddesi, No:57
Findikli 34427 Istanbul, Turkey
Telephone: +90 (212) 251 21 21
Fax: +90 (212) 252 50 58
E-mail: levent.celebioglu@teb.com.tr |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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