The European Investment Fund (EIF) and Finansbank have extended their guarantee agreement under the Micro-Credit Window of the Competitiveness and Innovation Framework Programme (CIP) helping to provide additional finance for Turkish businesses.

In addition to the TRY 500 million (c. EUR 220 million) of loans guaranteed under the CIP Micro-credit agreement since March 2010, SMEs in Turkey can now have access to an extra TRY 500 million (c. EUR 220 million), which will help to further support new entrepreneurs and create new jobs.

The current Micro-Credit agreement led to the creation of a new product “New Companies Support Package”, targeting micro-enterprises in their start-up phase. Due to the high take up of this product and strong demand from micro-entrepreneuers in Turkey, the EIF and Finansbank have decided to increase for the second time the amounts available to Turkish micro businesses.

Mr Olivier Edelman, Guarantees & Securitisation at EIF, said “This second contract extension demonstrates the excellent work Finansbank is doing in helping to enhance access to finance for local entrepreneurs. We are confident that this additional TRY 500 million will help support even more micro-businesses in Turkey in the coming months”.

Commenting on the transaction, Temel Güzeloğlu, CEO at Finansbank said: “This extension demonstrates the great co-operation between Finansbank and EIF. Finansbank is the first commercial bank in Turkish market to benefit from the CIP guarantee and has been one of the most successful banks in Europe to provide the EIF guaranteed loans. Our market research indicates that, one of the major problems small companies face, when they are trying to reach the finance to grow their businesses, is lack of collateral. Our co-operation with EIF helps us solve this problem and help small companies grow their businesses.”

Background information:

The Competitiveness and Innovation Framework Programme (CIP), which spans from 2007 to 2013, has been put in place to boost European productivity, innovation capacity and sustainable growth, whilst simultaneously addressing complementary environmental concerns.

Within the framework of the CIP, the EIF has been allocated EUR 1.1bn to be split between venture capital – with the High Growth and Innovative SME Facility (GIF) – and guarantees – with the SME Guarantee Facility (SMEG).

Under the SMEG, financial institutions are encouraged to enhance access to finance for SMEs. The facility offers an excellent tool to allocate additional financing volumes for those SMEs that would not otherwise have access to resources and financial engineering instruments because of the increased lending risk entailed. As such, the SMEG complements and broadens EIF’s own product offering.

The EU CIP SMEG Facility gives the EIF the opportunity to play an essential role in supporting sustainable job creation and entrepreneurship in European SMEs.

About Finansbank

Finansbank is a relatively young Bank in the Turkish Banking system, which was established on October 26, 1987. Since its establishment, Finansbank has grown to become the 5^th biggest private bank in Turkey. The key factors that brought Finansbank to its successful position today are its qualified staff and dynamic business structure. Finansbank is one the first banks in Turkey that has focused on SME financing. Finansbank is serving more than 170.000 active SME customers. With 500 enterprises receiving loans from Finansbank every day, the SME cash loan portfolio reached approximately to EUR 2.75bn as of today.

SME Banking’s share in Finansbank’s TL cash loans is 20.5% and this portion is growing every year. SME Banking has also considerable share in TL demand deposit volume. Finansbank aims to help SMEs in Turkey to grow and stimulate job creation. With this in mind, Finansbank’s SME Banking Team strives not only to be a bank for the SMEs but more importantly to be their reliable business partner with creative and unique products and high quality service.

About EIF

EIF's central mission is to support Europe's small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture capital and guarantees instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. The EIF total net commitments to private equity funds amounted to over EUR 6bn at end 2011. With investments in over 370 funds, the EIF is a leading player in European venture due to the scale and the scope of its investments, especially in high-tech and early-stage segments. The EIF guaranteed loan portfolio totalled over EUR 4.4bn in close to 220 operations at end 2011, positioning it as a major European SME guarantees actor and a leading micro-finance guarantor.

Contact

For further information, please contact David Yormesor, d.yormesor@eif.org, or visit EIF’s website www.eif.org or Finansbank’s website www.finansbank.com.tr.