MICROCAPITAL STORY: HSBC Turkey Allocates USD 5 million to Microfinance Loans in Turkey

HSBC Turkey, the Turkish arm of the global bank HSBC, announced the allocation of USD 5 million toward microcredit loans until 2010 in Turkey. According to Piraye Antika, the CEO of HSBC Turkey, the microcredit loans will be evenly split between urban areas, rural areas and young university-graduate entrepreneurs. In disbursing the loans, HSBC will work with three non-government organizations: the Turkish Waste Prevention Foundation, the Community Volunteers, and the Female Labor Assessment Foundation.

HSBC has indicated the loans will carry an interest rate of Turkish Lira Reference Interest Rate (TRLIBOR) with a one percent spread. The one percent spread will be allocated toward donations or plowed back into microcredit, according to Antika. As of August 15, 2008, the six month TRLIBOR rate was 17.4%.

Turkey is listed amongst HSBC’s priority countries for microfinance expansion, alongside Argentina, Brazil, China and Poland. According to HSBC’s 2007 Sustainability Report, its strategy is to “engage with the microfinance sector on a commercially viable and sustainable basis, not as philanthropy. The strategy exploits HSBC’s strengths and focuses the business on [its] existing products and operations such as cash and liquidity management, collections, receivables, currency, remittances and cards.”

HSBC, headquarted in London, was established in 1965. HSBC has operations in 85 countries, and is involved with microfinance in India, Mexico, the Philippines, Russia, Sri Lanka and the USA. MicroCapital has previously reported on HSBC’s involvement in microfinance, including its partnership with Islamic Relief to offer Islamic Microfinance in Pakistan, expansion in China and partnership with Indian microfinance institution Mann Deshi Mahila Sahakari Bank.

By Jocelyn Cheng, Research Assistant

ADDITIONAL RESOURCES:

The Banks Association of Turkey. Turkish Lira Reference Interest Rate (TRLIBOR).

HSBC. 2007 Sustainability Report.

HSBC Investor Presentation, March 2008. Sustainability at HSBC.

MicroCapital.org News Wire, July 25 2008. HSBC Ammanah partners with Islamic Relief to Launch Microfinance Program in Pakistan.

MicroCapital.org News Wire, March 28 2008. Rise in Rural Microfinance Investment from HSBC, Others Seen as Tip of Iceberg.

MicroCapital.org article, December 7 2006. Indian Microfinance Bank MDMSB Creates Partnership With International Bank HSBC.

Turkish Daily News, August 15 2008. Microcredit to fight poverty in Turkey.