PROJECT BRIEF
PROJECT OBJECTIVE: The project’s main development objective is to increase Turkish small and medium enterprises’ (SMEs) access to medium term finance.
PROJECT DESCRIPTION: The project will finance two credit lines targeting SMEs. The first component is a Euro 100 million equivalent wholesale credit line to TSKB to be intermediated through retail banks and leasing companies (Project Financial Intermediaries, PFIs) to SMEs in Turkey. The second component is a Euro 50 million equivalent credit line to be intermediated through Halkbank as a retail bank directly to SMEs. PFIs that will receive credit from TSKB will serve SMEs located in the west of the country while Halkbank will serve SMEs located in the east. The proposed lending instrument is a Financial Intermediary Loan (FIL), using IBRD funds. The FIL will be a Fixed Spread Loan (FSL) in Euro with 15 years maturity and 5 years grace period, with an embedded conversion option for swapping into TRY.
IMPLEMENTING and MONITORING:
Implementing: The implementation agencies for the proposed project are TSKB (Component 1) and Halkbank (Component 2). Each bank has established a Project Implementation Unit (PIU), which will be fully funded and staffed and will operate under the overall supervision of an Executive Vice President.
Monitoring: The WB will evaluate project progress through regular reporting by TSKB and Halkbank and through supervision missions. TSKB and Halkbank have agreed to submit yearly reports including output and outcome indicators and semi-annually financial management reports to the WB.
BENEFITS: Increase access to credit for Turkish SMEs throughout the country, including in the east.
PROJECT STATUS: Negotiations were completed on April 25. Board approval is expected for June 8, 2006.
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