Garanti BBVA, a Turkish subsidiary of Spain’s Banco Bilbao Vizcaya Argentaria (BBVA), recently entered loan agreements with the UK-based European Bank for Reconstruction and Development (EBRD), the World Bank Group’s International Finance Corporation (IFC), and a syndicate of unidentified commercial banks. The sizes of the first two loans are, respectively, USD 55 million and USD 50 million. These are to be used mostly to support micro-, small and medium-sized enterprises (MSMEs) affected by COVID-19. The third loan agreement, which is in the amount of USD 594 million, has a “green” component, through which Garanti BBVA has agreed to halt financing new conventional power plants and to convert 80 percent of its electricity usage to renewable energy. As an incentive, “Meeting or outperforming these targets will enable Garanti BBVA to obtain a margin benefit, while falling short of the commitments will lead to a penalty.”
Garanti BBVA is a financial services provider serving 15.8 million customers via 922 branches in Turkey, as well as service locations in China, Cyprus, Malta, Germany and the United Kingdom. The bank works in the MSME sector, retail banking, investment banking, insurance, asset management, and corporate and commercial finance. As of 2018, Garanti BBVA reported consolidated assets of TRY 345 billion (USD 84.3 billion), return on average assets of 1.5 percent and return on average equity of 12.4 percent. As of 2019, BBVA has EUR 699 billion (USD 756 billion) in total assets and 80 million customers in 30 countries.
Founded in 1991, EBRD seeks to support a “transition to open, market economies, whilst fostering sustainable and inclusive growth” in 38 countries in Central Asia, Eastern Europe and North Africa. It does this by providing business advice, supporting trade finance, and investing debt and equity in MSME funders. With a focus on “the promotion of private and entrepreneurial initiative,” the bank plans to disburse about EUR 8 billion (USD 8.6 billion) during 2020 to grow its portfolio to about EUR 48.5 billion (USD 52.4 billion). EBRD’s shareholders comprise 69 countries plus the European Union.
IFC offers loans, equity investments, advisory services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. As of 2019, it reported total assets of USD 94.3 billion.
The World Bank Group is a multilateral organization whose goal is “to end extreme poverty and promote shared prosperity in a sustainable way.” As of 2020, it has 189 member nations. The group encompasses: (1) the International Development Association and the International Bank for Reconstruction and Development, which make up the World Bank; (2) the International Finance Corporation; (3) the Multilateral Investment Guarantee Agency; and (4) the International Centre for Settlement of Investment Disputes. During the year ending June 2019, the World Bank Group disbursed a total of USD 62.3 billion in loans, grants, equity investments, and guarantees to partner countries and private businesses.
By Andrew Janni, Research Associate
Sources and Additional Resources
Garanti BBVA press release
https://www.garantibbvainvestorrelations.com/en/images/pdf/2020_05_20_Announcement_regarding_Syndicated_Loan_Agreement.pdf
EBRD press release
https://www.ebrd.com/news/2020/new-us-55-million-ebrd-loan-to-turkeys-garanti-bbva-.html
IFC press release
https://ifcextapps.ifc.org/IFCExt/Pressroom/IFCPressRoom.nsf/0/A2EC533F62E4E55E8525856E006CFF8F
Garanti BBVA corporate profile
https://www.garantibbva.com.tr/en/our_company/about_garanti/garantibank.page
IFC homepage
https://www.ifc.org
EBRD homepage
https://www.ebrd.com
World Bank homepage
https://www.worldbank.org/
Did you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at http://www.microcapital.org/products-page/.
Similar Posts:
- MICROCAPITAL BRIEF: EBRD Loans $4.4m to KEP Trust of Kosovo with Focus on Rural, Women-led MSMEs
- MICROCAPITAL BRIEF: EBRD Purchases 5% Equity Stake in ProCredit from IFC, Increasing Exposure to SMEs in Europe, Ecuador
- MICROCAPITAL BRIEF: EU Guaranteeing $113m to Support $490m in Lending by EBRD to MSMEs in Eastern Europe, North Africa, Western Asia
- MICROCAPITAL BRIEF: EBRD Loans KICB $7m for MSME Financing in Kyrgyzstan
- MICROCAPITAL BRIEF: EBRD Loaning $5m to ING Finansal Kiralama for Leasing for Energy Efficiency, Renewables in Turkiye
