EBRD to focus on exporting sectors, financing in Turkish Lira

Barçın Yinanç - barcin.yinanc@hdn.com.tr

The European Bank of Reconstruction and Development (EBRD) will focus more this year on exporting sectors while it will continue its support for local currency financing in Turkey, according to a top executive of the bank.

The EBRD’s 7 billion euro Turkey portfolio is the largest among 38 economies where the bank invests and 2018 has been a challenging year to manage this portfolio due to the economic difficulties in the country.

A huge work of the bank had to be redirected from looking at new opportunities to managing the portfolio as the banks’ 140 clients, from small to large companies, have been affected by economic strains, Arvid Tuerkner, EBRD managing director for Turkey, told the Hürriyet Daily News in an interview.

“I am proud to say that we still managed to do a lot of new business as well,” said Tuerkner, admitting however that it took more time and energy to convince the “risk people in London.”

2019 is not going to be an easy year either, and the bank will shape its positions in the light of the trends in 2018, one of which is the demand for local currency financing.

“We have been financing local currency bonds in the past as one of several investors. Since local currency finding has been recognized as more important I think we will do a few of those as well. I can say that one is already underway,” said Tuerkner.

As the first half of 2019 might prove to be particularly difficult, with growth expected to pick up towards the end of the year, it might be hard to find good projects to invest in as companies are not in an investment mood, still busy dealing with their balance of sheets, according to Tuerkner.

This will lead to a shift towards export sectors. “There are very strong exporters in Turkey and I think we will support some of them,” he said. Companies with cutting-edge technology might fare well in terms of exports, according to Tuerkner, who counted automotive industry, spare parts suppliers of cars, white goods and organic agriculture among them.

Financing women-led business as well as innovative SMEs will continue to be a priority for the bank.

“The banking sector is somewhat slowing down. We will continue lending to banks to enable them to finance women-led SMEs as well as innovative SMEs,” Tuerkner said, adding that the bank’s “Finance and Advice for Women in Business” initiative has reached 18,000 women in Turkey. “There is demand by banks to do more, but new banks also want to learn because it is not just about money and lending; it is also about customizing the product for this client group.”

Reforms remain a priority for the EBRD. “Turkey has to deal with a lot of issues in terms of geopolitical uncertainties which it can do very little about. But there are certain things it can, like improving the investment climate,” said Tuerkner. In that sense the aftermath of municipal elections in March provides a window of opportunity as no elections are foreseen for a long time, during which Turkey can address the reform needs as there will be no election pressure.

The EBRD is working together with all stakeholders to redesigning the curriculum for vocational training to address the shortage for stilled workers while it also works with capital markets boards as the market needs more transparency.

The EBRD is a leading financer of renewables in Turkey and the sector will remain important for the bank. “Support mechanism for renewable energy projects is running out in 2020. Turkey should announce the new support mechanism without further delay in order to continue to attract investment,” said Tuerkner.