Guarantees to Support the Greening of Türkiye’s Export Production
WASHINGTON, September 10, 2024 — The World Bank Group has partnered to support Türkiye’s export sector with both long-term guarantees through the World Bank and short-term guarantees through the Multilateral Investment Guarantee Agency (MIGA). These guarantees will provide Turk Eximbank, Türkiye’s official export credit agency, access to large-scale financing at a lower cost, short-term liquidity for production of export goods and long-term capital for decarbonization of Turkish exports.
In August 2024, MIGA issued a trade finance guarantee of €297 million to ING Bank, a branch of ING-DiBa AG of Germany; Standard Chartered Bank of the United Kingdom; HSBC Bank Middle East Limited of the United Arab Emirates; BNP Paribas of France; and Credit Europe Bank N.V. of the Netherlands for their short-term loan to Turk Eximbank. This trade finance guarantee covers losses resulting from the failure of a state-owned enterprise or public authority to make a payment related to trade finance transactions for up to three years.
In May 2024, the World Bank issued a partial loan guarantee of €600 million to Deutsche Bank, Standard Chartered Bank, BNP Paribas, and ING Bank for a €1 billion, 10-year loan facility to Turk Eximbank to mobilize long-term commercial funding to support Turkish exporters’ greening efforts. The project will help provide affordable, long-term financing for exporters to invest in green, climate-resilient solutions, such as upgrading equipment, heating and cooling systems, as well as reducing or recycling waste.
“Both guarantee projects align with the World Bank Group’s ambition to innovate products and product allocations,” said Hiroshi Matano, MIGA Executive Vice President. “We are excited to support Turk Eximbank in its first engagement with a multilateral organization to secure financing for both short-term and long-term loans.”
The proceeds from the MIGA-guaranteed project will be used to provide short-term trade loans (one year or less) to Turkish exporters, addressing the short-term liquidity needs due to the time mismatch between incurring production costs (e.g., front-end expenditures for production of export goods) and receiving payments from customers. By reducing borrowing costs and increasing access to foreign currency financing for Turkish exporters, the project aims to support exporters who face high borrowing costs and limited foreign exchange credits. Turk Eximbank will allocate 20 percent of the loans for small and medium enterprises; 15 percent for green export companies; 10 percent for medium-high technology companies; and 15 percent for women-inclusive firms. This will help narrow the finance gap for women-led small and medium enterprises.
The proceeds from the World Bank-guaranteed project will be used for exporters’ green investments, including for adaptation finance activities. At least 60 percent of the loan proceeds will support exporters affected by the European Union’s carbon border adjustment mechanism policy; 25 percent will support export oriented small and medium enterprises; and 15 percent will be dedicated for women-inclusive firms. Supporting these exporters will help them maintain and expand their export competitiveness, particularly regarding exports to the EU, which will be a key target export market for beneficiary exporters.
“After providing long-term financing with World Bank support, it is now our honor to facilitate MIGA with innovative short-term trade-related financing for Turk Eximbank aimed to further enhance the export potential of Türkiye and to navigate toward sustainability improvement,” said Michiel de Vries, Global Head of Structured Export Finance at ING Bank.
“Through this loan provided under the guarantee of MIGA, Turk Eximbank will continue to increase its support to Turkish Exporters,” said Ali Güney, Turk Eximbank CEO.
As a producer of emission-intensive products, reducing the carbon footprint of Turkish exporters is particularly vital as the EU begins imposing tariffs on carbon-intensive products from 2026. The EU market accounts for 40% of Turkish exports.
World Bank Group guarantees are more favorable in terms of maturity and costs compared to conventional market options, providing a much-needed impetus for exporters to reduce carbon emissions and boost green exports.
The World Bank Group can address disparate needs of the export sector in parallel. The World Bank’s decarbonization support will equip exporters with a long-term growth driver, while MIGA’s liquidity support will enable an immediate expansion of production capacity. The project is a part of broader World Bank Group support for greening Türkiye’s industrial sector and economy by supporting the green transition of its exporters and accelerating green exports.
About ING Bank
ING Group NV is a multinational banking and financial services company headquartered in the Netherlands. As of December 2023, the group had total assets of €975 billion, up from €967 billion at the end of December 2022. ING Group NV is rated A+, Baa1, and A- by Fitch, Moody’s, and S&P, respectively.
Standard Chartered Bank
Standard Chartered Bank (SCB) is a British multinational banking and financial services company headquartered in London. In terms of geography, the largest contributor to profit before tax was Asia with a share of total profit before tax of 83 percent, followed by Africa & Middle East regions at roughly 23 percent. SCB is rated at A1, A+ and A+ by Moody’s, Fitch and S&P, respectively.
HSBC Middle East Limited
HSBC is a British multinational universal bank and financial services holding company with offices in 62 countries serving around 42 million customers. As of December 2023, HSBC reported a return on average tangible equity of 14.6 percent, and CET1 ratio of 14.8 percent. HSBC is rated A+, A3 and A- by Fitch, Moody’s, and S&P, respectively.
BNP Paribas
BNP Paribas (BNPP) is a global bank based in France with sizeable international operations. In FY23, the Group had total assets of €2,591 billion and net income of about €11.4 billion, with close to 183,000 employees in 63 countries. BNPP is rated Aa3 by Moody’s, AA- by Fitch and A+ by S&P, all with a stable outlook.
Credit Europe Bank N.V.
Credit Europe Bbank (CEB) was founded as a specialized trade finance bank, aiming to participate in wholesale financing of international trade. In later years, CEB started retail banking activities and other wholesale banking sectors including savings accounts, mortgage/consumer loans credit cards, project finance and working capital loans. CEB is rated Ba3/Stable by Moody’s and BB-/Positive by Fitch.
About Deutsche Bank
Deutsche Bank provides retail and private banking, corporate and transaction banking, lending, asset and wealth management products and services as well as focused investment banking to private individuals, small and medium-sized companies, corporations, governments, and institutional investors. Deutsche Bank is the leading bank in Germany with strong European roots and a global network.
About World Bank Group Guarantees
Initiated in 2024, World Bank Group Guarantees consolidates all guarantee products and experts from across the World Bank Group institutions at MIGA. It provides a simplified and comprehensive menu of guarantee solutions, enabling clients to select the instrument that best suits their needs. The platform streamlines processes, removes redundancies, and provides greater accessibility by de-risking investments in developing countries. Its goal is to boost the WBG’s annual guarantee issuance to $20 billion by 2030.
For more information about the guarantee platform, please visit: https://www.worldbank.org/wbgguarantees
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Contact:
In Washington: Elizabeth Howton, (202) 458-5922 or ehowton@worldbankgroup.org