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IFC Invests in Turkey’s First Mortgage Covered Bond in Local Currency to Boost Green Mortgages


In Istanbul:
Basak Pamir
Phone: +90 212 385 3075
E-mail:
BUlgen@ifc.org


Istanbul, June 2, 2017 - IFC, a member of the World Bank Group, is investing $150 million in the equivalent of Turkish lira in covered bonds issued by Turkey’s Garanti Bank, aimed at helping to boost the development of green buildings in the country’s housing sector.

The five-year maturity bond is backed by a portfolio of residential mortgages. Half of IFC’s funds will be used to provide green mortgages for the purchase of energy-efficient housing. The bond is issued as part of Garanti Bank’s €5 billion covered bonds program, launched in 2015 and a relatively new funding instrument in Turkey’s capital markets. They offer an attractive funding cost and are viewed as low-risk since they are backed by the assets of the issuing banks.

Garanti Bank President & CEO Ali Fuat Erbil said: “Garanti Bank recorded groundbreaking transaction with IFC, the first ever residential mortgage covered bond in Turkey to support green mortgages. Garanti Bank is reinforcing its support to sustainable future of Turkey via a USD 150 million equivalent to Turkish Lira Covered Bond issuance. This transaction once again proved the trust and stability established by Garanti and indeed Turkey among the international financial institutions. Continuing the success of accessing international funding sources and deepening relations, Garanti moves ahead with its vision of being the primary bank of international banks.”

Households and the services industry make up the largest energy consumption in Turkey. Turkey’s buildings sector also loses substantial energy every year due to lack of insulation, with the country using 10 times less insulation material per capita than Europe. With heating and cooling costs comprising 45 percent of a typical household’s energy consumption, there are huge potential savings to be made here.  

“With this financing, we are addressing some of IFC’s key development priorities in Turkey—climate change, sustainable cities, and capital markets development,” said Marcos Brujis, IFC’s Global Director, Financial Institutions Group. “Diversified and innovative funding instruments in Turkish lira will help to deepen capital markets and increase investor confidence. Green mortgages also offer better borrowing rates for customers, while helping to save energy costs.”

By offering green mortgages, banks increase the purchasing power of buyers by folding in the costs of the home’s improvements. Buyers can thus pay for features that lower utility bills, while banks can offer new loans. Garanti Bank expects its green housing loans portfolio to be worth $100 million by the end of 2020.

IFC’s strategy in Turkey aims to provide financing through financial intermediaries and direct investments to scale up energy efficiency projects and sustainable energy finance, reducing greenhouse-gas emissions and promoting sustainable cities.


IFC has supported private sector development in Turkey for 50 years. Turkey is the second-largest country exposure for IFC globally. In line with the World Bank Group Turkey Country Partnership Strategy for fiscal years 2012 to 2017, IFC has invested nearly $5 billion in private sector projects in Turkey.

About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with 2,000 businesses worldwide, we use our six decades of experience to create opportunity where it’s needed most. In FY16, our long-term investments in developing countries rose to nearly $19 billion, leveraging our capital, expertise and influence to help the private sector end extreme poverty and boost shared prosperity. For more information, visit
www.ifc.org

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About Garanti Bank

Established in 1946, Garanti Bank is Turkey’s second largest private bank with consolidated assets of US$ 90.4 billion as of March 31, 2017.Garanti is an integrated financial services group operating in every segment of the banking sector including corporate, commercial, SME, payment systems, retail, private and investment banking together with its subsidiaries in pension and life insurance, leasing, factoring, brokerage, and asset management besides international subsidiaries in the Netherlands and Romania. As of March 31, 2017, Garanti provides a wide range of financial services to its 14.5 million customers with more than 19 thousand employees through an extensive distribution network of 956 domestic branches; 7 foreign branches in Cyprus, one in Luxembourg and one in Malta; 3 international representative offices in London, Düsseldorf and Shanghai with 4,794 ATMs, an award-winning Call Center, internet, mobile and social banking platforms, all built on cutting-edge technological infrastructure.