Turkish lending scheme example for Arab Spring

ISTANBUL- Hürriyet Daily News

From left to right; Michael Botzungof of the IFC; Varol Civil, TEB General Manager; Khawaja Aftab Ahmed, director of Financial Markets & Private Equity Funds; and Turgut Boz of TEB SME banking are seen at a press conference held yesterday in Istanbul.

Turkey’s small and medium enterprise (SME) banking will be introduced as a model for post-Arab Spring states, according to the top executives of the International Finance Corporation (IFC), a member of the World Bank group, speaking to Hürriyet Daily News.

“We will invest nearly $4 billion in the Middle East and North African region this year,” said Khawaja Aftab Ahmed, director of Financial Markets & Private Equity Funds, Europe, Central Asia, Middle East and North Africa at the IFC, on the sidelines of a joint press meeting with Türk Ekonomi Bankası (TEB) in Istanbul.

The IFC revealed its report, in which the Türk Ekonomi Bankası is chosen as one of three banks around the world as a model for its achievements in SME banking. TEB is defined as “a leading Turkish bank offering banking services as a cutting-edge model among other banks in the world.”

Ahmed said nearly 70 percent of the investment would be directed to SME enterprises in the region, adding that Turkey’s successful experience in SMEs presented a unique example for countries experiencing a fresh start with the Arab Spring. According to him, SMEs in the region could be brought back to the market though lifeline credits, which could gear up the regional economy.

“When we talk with bankers in the region, they may not fully take our advice into consideration, but when we come up with successful models from the region like Turkey, closer to their own reality, they try to learn.”

“We will have a speaker from Turkish Economy Bank (TEB) coming with us to Tunisia in the first week of April to present this model to the broader banking community in the region,” said Michel Botzung, Senior Operations Officer and Global Products Specialist at the IFC.

According to him, local economies of the states in the region could be reborn from the ashes through extensive consultancy on SME banking.

“I think, in two or three years time we will see replications of the Turkish banking model in many states in North Africa and the Middle East,” said Botzung.

Model for West Africa
“We are also taking the model to West Africa as well,” he added.

He said there was great enthusiasm among bankers in the region to know more about the success stories in SME banking.

The number of the bank’s SME clients increased from under 20,000 in 2005 to just over 700,000 last year, said Varol Civil, the general manager of TEB speaking at the meeting. The lender’s SME loans as a share of total loans grew from 25 percent in 2005 to just over 44 percent by the end of last year according to him.

Civil also said that driven by the success in Turkey, BNP Paribas (share holder of the lender) had replicated some of TEB’s nonfinancial services in Algeria and was looking to further replicate this model in wider region.

BNP Paribas and Çolakoğlu Group each hold 50 percent of TEB Holding’s shares and BNP holds a total 67 percent in the new TEB, as a result of the merger in February 2011 between TEB and Fortis Bank Turkey.