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
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.
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 $19 billion, leveraging our capital,
expertise and influence to help the private sector end extreme poverty
and boost shared prosperity. For more information, visit www.ifc.org
About Garanti Bank
Established in 1946, Garanti Bank is Turkey’s
second largest private bank with consolidated assets of US$ 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.