What is Turkey MSME Finance Facility?

The EBRD Turkey MSME Lending Programme combines long term loans by the European Bank for Reconstruction and Development (EBRD) with advisory and training components (Technical Assistance, TA) to a number of selected Turkish partner banks. The TA component of the programme was launched in November 2010.

The overall objective of the Programme is to help Partner Banks (PBs) participating in the EBRD MSME Finance Facility in Turkey introduce and/or further accelerate Micro- Small and Medium Sized Enterprise (MSME) lending techniques to the least economically developed regions of the country, thereby increasing funding to MSME borrowers, specifically to agricultural borrowers.

Besides the measures supporting MSME lending, the programme consists of specific technical assistance measures to increase credit to the agriculture sector and enable PBs to lend at stable levels in the agriculture market.

For the time being, DenizBank, Garanti Bank, Isbank, Vakifbank and Yapi Kredi Bank are the five partner banks of the programme.

TURKEY

MSME Finance Facility NEWSLETTER

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The opinions expressed in this publication are those of Frankfurt School of Finance & Management and do not

necessarily reflect the views of the EBRD, EU or U.S. Agency for International Development.

Successful Launch!Successful Launch!Successful Launch!Successful Launch!

We are pleased to present you with the newest developments of the EBRD Turkey MSME Finance Facility. After the successful launch of the technical assistance programme in November 2010, many encouraging results have been achieved to date. This is the first newsletter published to inform you about the achievements, latest updates and news on the programme.

The The The The Frankfurt School teamFrankfurt School teamFrankfurt School teamFrankfurt School team welcomes welcomes welcomes welcomes partner banks’, partner institutions’ and MSME partner banks’, partner institutions’ and MSME partner banks’, partner institutions’ and MSME partner banks’, partner institutions’ and MSME Finance Facility clients’ interest and assistance.Finance Facility clients’ interest and assistance.Finance Facility clients’ interest and assistance.Finance Facility clients’ interest and assistance.

Training ProgrammesTraining ProgrammesTraining ProgrammesTraining Programmes

Based on the detailed review of MSME and agricultural lending related areas of the partner banks as well as the detailed technical assistance and training needs assessments in each partner bank, Frankfurt School has designed various training programmes targeting the specific needs of partner banks and successfully started training activities in April 2011.

As a part of the Technical Assistance component of the EBRD MSME Finance Facility, the “Certified Expert in MSME Lending Programme” is being conducted for Vakifbank and Yapi Kredi Bank. The purpose of the certification training on MSME lending is to promote cash flow based lending to MSMEs and to support the staff in the branches by providing them with best practice tools for their daily work.

For a period of 5 days, a group of around 20 bank customer relationship managers and loan officers are trained on subjects such as customer-focused banking, financial and non-financial analysis, working capital management and cash flow. In addition, trainees gained various practical skills through group works and case studies. At the end of the seminar, the participants are required to pass an exam to become “Expert in MSME Lending”, certified by Frankfurt School of Finance & Management.

As of end June 2011, 102102102102 loan loan loan loan officers officers officers officers participated in the certification training. The feedback from the participants of the certification trainings were overwhelmingly positive with a satisfaction level of around 98%satisfaction level of around 98%satisfaction level of around 98%satisfaction level of around 98%....

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Technical Assistance Services

Intensive training programmes, seminars and workshops are among the major components of the Technical Assistance measures within the framework of EBRD MSME Finance Facility. Frankfurt School of Finance & Management provides the following training programmes:

o “First Step in MSME Lending”

o “The Certified Expert in MSME Lending”

o “Marketing & Sales Training for Agriculture Customer Relationship Managers”

o “Agricultural Lending” and

o “Small Enterprise Lending”

By the end of June 2011, 369 loan officers and relationship managers from DenizBank, Isbank, Vakifbank and Yapi Kredi Bank have been trained in various training programmes by Frankfurt School.

In addition to the trainings and seminars mentioned above, Frankfurt School provides consultancy to PBs especially in agricultural lending. For that purpose, Frankfurt School developed a unique agro-credit assessment tool to support PBs’ staff with little or no agricultural knowledge in the decision making process. Frankfurt School will also develop a new financial product “Value Chain Finance” (VCF) which networks farmers to improve their capacity to get finance individually or as groups.

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“First Step in MSME Lending Training” was launched for Vakifbank and Isbank staff. As of end June 2011, 8 training programmes were delivered successfully with the participation of 166 166 166 166 bankbankbankbank staff staff staff staff. 98.898.898.898.8% of the participants% of the participants% of the participants% of the participants rated the training as “excellent” or “good”, proving the high quality and relevance of the programme.

The opinions expressed in this publication are those of Frankfurt School of Finance & Management and do not

necessarily reflect the views of the EBRD, EU or U.S. Agency for International Development.

Marketing & Sales Skills Training was designed for DenizBank Customer Relationship Managers responsible for agriculture banking activities in order to gain new business or cross-selling to existing customers. “Developing strong customer relationship skills” and “learning how to use the consultative sales approach” are the key components of the course. The course is supported by case studies which focus on identifying customer needs and improving

After a detailed review of business strategies and strategic orientation of each partner bank with a special focus on MSME lending and agricultural lending during the inception phase, Frankfurt School has identified possible improvement points in each partner bank. Strategic workshops on development or improvement of agricultural lending capacity were conducted in all interested partner banks.

sales skills through DenizBank’s agricultural banking products. Frankfurt School delivered two programmes on “Marketing & Sales Training to DenizBank Agriculture Banking Relationship Managers” in April 2011 and trained 38 agriculture banking relationship managers38 agriculture banking relationship managers38 agriculture banking relationship managers38 agriculture banking relationship managers.

Through various training programmes designed to promote capacity building in partner banks, a total of 369369369369 bankers bankers bankers bankers have been trained as of June 2011. The training programmes will continue in the upcoming period.

Training ProgrammeTraining ProgrammeTraining ProgrammeTraining Programme Number of Training DaysNumber of Training DaysNumber of Training DaysNumber of Training Days Number of Bankers TrainedNumber of Bankers TrainedNumber of Bankers TrainedNumber of Bankers Trained

MSME Certification Training 25 102

Marketing & Sales Training 4 38

First Step in MSME Lending 16 166

Introduction to CAP tool 1 24

Agricultural Lending 2 25

Small Enterprise Lending 3 14

TOTALTOTALTOTALTOTAL 51515151 369369369369

Agricultural ConsultancyAgricultural ConsultancyAgricultural ConsultancyAgricultural Consultancy

In order to improve risk assessment of farmers / agricultural enterprises, an innovative scoring model, CAP (client assessment programme) was developed and adapted to the Turkish environment. The CAP tool is designed as a comprehensive risk assessment model, but it will be tailor-made depending on the risk appetite and lending strategies of each individual partner bank. A CAP Tool Presentation Workshop was conducted for Yapi Kredi Bank where the tool

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MSME Finance Facility Programme Regions

Adıyaman, Ağrı, Amasya,

Ardahan, Artvin, Batman,

Bayburt, Bingöl, Bitlis, Çankırı,

Çorum, Diyarbakır, Elazığ,

Erzincan, Erzurum, Gaziantep,

Giresun, Gümüşhane, Hakkari,

Hatay, Iğdır, Kahramanmaraş,

Kars, Kastamonu, Kayseri,

Kilis, Malatya, Mardin, Muş,

Ordu, Osmaniye, Rize,

Samsun, Siirt, Sinop, Sivas,

Şanlıurfa, Şırnak, Tokat,

Trabzon, Tunceli, Van, Yozgat.

MSME Finance Facility Website

The official programme

website, www.msmeturkey.com

will be activated soon. Please

visit the website for news and

announcements on the

programme.

The opinions expressed in this publication are those of Frankfurt School of Finance & Management and do not

necessarily reflect the views of the EBRD, EU or U.S. Agency for International Development.

Branch Monitoring & Client VisitsBranch Monitoring & Client VisitsBranch Monitoring & Client VisitsBranch Monitoring & Client Visits

Frankfurt School consultants visited a number of clients who have benefited from the Bank’s loan programmes made available through partner banks in Turkey. The main purpose of these visits was to meet with successful borrowers who really have profited from EBRD funding in expanding their business activities.

As of June 2011, Frankfurt School consultants have visited 8 branches of Isbank and Vakifbank in 7 project regions (Trabzon, Rize, Ordu, Antakya, Kilis, Adıyaman and Sanlıurfa) and 14 clients who used a loan under EBRD MSME Finance Facility.

Besides establishing relationships with partner banks and clients, these regional visits provide an opportunity to establish cooperation with other non-bank institutions such as Chamber of Commerce and Industry, Chamber of Craftsmen and Artisans, Entrepreneur Associations etc. In cooperation with these institutions, Frankfurt School aims to organize seminars for MSMEs, especially for women entrepreneurs, to make them familiar with banking instruments and increase their chances to raise a commercial bank loan.

has been introduced and subsequently updated based on the Bank’s specific requests. In order to accompany CAP tool, an Agricultural Lending training has been designed and the pilot session has been delivered.

In addition, a number of regional visits were conducted to collect agricultural data to be included into the CAP tool. A regional agricultural map of Turkey has been produced and provided to the interested partner banks.

Belkar Halı was established in 1960s as a family business in Trabzon. Mr. Ali Osman Özer decided to continue the family business and became the owner of the company in 1986 while changing the name. The company has been involved in manufacturing, and retail and wholesale of carpets for the last 15 years and sales of furniture for the last 5 years. As of April 2011, the company employs 10 employees but this number can go up to 12 depending on the season.

“The EBRD MSME loan came just at the right time!”“The EBRD MSME loan came just at the right time!”“The EBRD MSME loan came just at the right time!”“The EBRD MSME loan came just at the right time!”

The company has a chronic financing gap in its operating cycle. The end-customers or retailers pay late which makes it impossible for the company to match its debts and receivables. Once the company asks for a longer maturity from suppliers, prices increase substantially. All these problems prevented Mr. Özer to invest and eliminate other bottlenecks of his business. “The EBRD MSME loan came just at the right time” says Mr. Özer. The loan was used to purchase a new small truck for marketing and delivery purposes. With the increased capacity, Belkar now serves 16 different cities all over Turkey. The loan had a certain job creation impact as well. 2 new people have been recruited after the loan.

Mr. Özer emphasizes the importance of having a large showroom in his business and that is why he wants to invest in opening a large showroom in the future.

Mr. Özer says that it was a big coincidence for him to start manufacturing carpets. After a period of 10 years with import history, Mr. Özer learnt the manufacturing techniques from his foreign counterpart and decided to manufacture his own carpets in 1996. Besides carpets manufactured in-house, the company currently sells carpets of some well-known brands.

TA Services:

Frankfurt School of Finance & Management

Nispetiye Cad. Ece Apt. B Blok No: 49 / 17

Etiler 34337 Beşiktaş

Istanbul / Turkey

Tel: (90) 212 352 20 77

Fax: (90) 212 352 20 76

E-mail: e.kocoglu@int.fs.de

Web: www.msmeturkey.com

4 MSME Finance Facility Newsletter Volume 1 June 2011

This programme is funded by the European Bank of Reconstruction and Development

(EBRD).

The EBRD is a multinational institution set up with the specific aim of assisting countries to

develop into market-oriented economies. The shareholders include 61 countries from both the

region and the rest of the world, plus the European Commission and the European Investment

Bank.

The EBRD invests and operates in 29 countries from central Europe to central Asia. Investing

primarily in private sector clients whose needs cannot be fully met by the market, the Bank

promotes entrepreneurship and fosters transition towards open and democratic market

economies. Please visit www.ebrd.com for more details.

The technical assistance component of the programme is financed by U.S. Agency for

International Development.

USAID is an independent federal government agency that receives overall foreign policy

guidance from the Secretary of State. USAID works in agriculture, democracy & governance,

economic growth, the environment, education, health, global partnerships, and humanitarian

assistance in more than 100 countries to provide a better future for all and supports long-term

and equitable economic growth and advances U.S. foreign policy objectives.

USAID provides assistance in five regions of the world: Sub-Saharan Africa, Asia, Latin America

and the Carribean, Europe and Eurasia and the Middle East. Please visit

www.usaid.gov/locations/ europe_eurasia/countries/tr/ for more details.

The technical assistance services within the programme are provided by Frankfurt

School of Finance and Management.

Frankfurt School of Finance & Management (former Bankakademie) is the leading private

business school and advisory institute in Germany with more than 50 years of experience in

consulting, qualification and training services in all areas of banking and finance.

International Advisory Services, operating since 1992, is committed to improving financial

markets and increasing financial access to finance for low-income populations in developing

and transition countries and emerging markets. Please visit www.frankfurt-school.de for

more details.

www.msmeturkey.com

This programme is supported by the European Union.

The European Union is made up of 27 Member States who have decided to gradually link

together their know-how, resources and destinies. Together, during a period enlargement of

50 years, they have built a zone of stability, democracy and sustainable development whilst

maintaining cultural diversity, tolerance and individual freedoms. The European Union is

committed to sharing its achievements and its values with countries and peoples beyond its

borders. The European Commission is the EU’s executive body.

"This publication was made possible through support provided by the Office of Economic Growth, Bureau for Europe and Eurasia, U.S. Agency for International Development, under the terms of Grant No. AID-EE-G-10-00001. The opinions expressed in this publication are those of the author(s) and do not necessarily reflect the views of the U.S. Agency for International Development."