Azerbaijan, Baku, 1 July / Trend/
The European Bank for Reconstruction and Development (EBRD) provided $65 million worth of subordinated loan to Türk Ekonomi Bankası (TEB) to assist micro, small and medium-sized enterprises (MSMEs) in Turkey's developing regions, EBRD reported on Monday.
According to the report, the loan will also strengthen the bank's capital structure.
"TEB will on-lend the EBRD funds to MSMEs operating predominantly outside of big cities, increasing credit availability to these businesses. With this loan, the EBRD aims in particular to assist MSMEs - including companies with fewer than ten employees - and also to boost agribusiness in developing areas where access to financing remains limited," EBRD said.
MSMEs are the driving force of the Turkish economy, accounting for 80 per cent of employment and 60 per cent of exports, while agriculture accounts for around 10 per cent of GDP.
According to EBRD Director for Turkey Mike Davey, a high proportion of small businesses outside big cities are involved in agriculture and these enterprises would benefit from substantially enhanced credit from commercial banks.
"The EBRD has a focus on making financing - the lifeblood of businesses - more accessible in developing regions. We are particularly happy to build on our successful cooperation with TEB and to help it expand its MSME lending," he said.
Controlled by BNP Paribas and Çolakoğlu Group, TEB was the sixth-largest private bank in Turkey according to unconsolidated asset size in the first quarter of 2013. The EBRD has previously invested 65 million dollars in TEB for on-lending to agribusinesses in rural areas to encourage their growth. Financing has been provided to 409 companies, all located in remote regions.
So far, the bank has disbursed around $500 million to Turkish SMEs through such credit lines to local banks. Since the start of its operations in Turkey in 2009, the EBRD has invested more than 3 billion euros in the country, both in direct projects and through credit lines. Last year, Turkey became the EBRD's second-largest country in terms of operations by annual business volume with 1 billion euros in new investments in 2012 alone.