Turkish public lender Ziraat Bank secures $1.24 billion syndicated loan

Turkey’s largest bank announced on Monday that it had secured a syndicated loan totaling $1.24 billion, managing to fully renew the loan it secured last year.

The loan will be used according to environmental sustainability criteria and to support gender equality in production, Ziraat Bank said in a statement.

The deal was concluded under the coordination of Abu Dhabi Commercial Bank PJSC (ADCB), Emirates NBD Capital Limited and Commercial Bank PSQC.

Emirates NBD Capital Limited, Standard Chartered Bank and Sumitomo Mitsui Banking Corporation have assumed the role of sustainability coordinators in the agreement.

Ziraat said $352.5 million of the loan was borrowed at the secured overnight funding rate (SOFR) plus 275 basis points and that a portion of 814 million euros ($885.88 million ) had been borrowed from Euribor plus 210 basis points.

The loan attracted interest from 45 banks in 21 countries, the public lender noted.

“We assess this interest as an indicator of confidence in the Turkish economy, the Turkish banking sector and our bank under all circumstances,” Ziraat Bank chief executive Alpaslan Çakar said in the statement, noting a challenging environment as well. marked by monetary tightening on a global scale.

“Our bank will continue to support the real sector and sustainable economic growth with this resource through foreign trade transactions,” Çakar noted.

Ziraat Bank’s capital was increased in mid-February from TL 21.8 billion to TL 34.9 billion, with the amount to be paid by the Turkey Wealth Fund (TWF).

The move aims to stabilize banks and position public lenders, particularly to boost lending in line with the central bank’s series of interest rate cuts.

The TWF wholly owns Ziraat Bank, 75% of Halkbank and 36% of VakifBank, according to public data.

Halkbank and VakıfBank announced earlier in February that they would carry out capital increases through private placement, with a combined total sale proceeds of TL 26.8 billion and the issued shares to be sold to TWF.

The government has approved a model based on lower borrowing costs to boost credit, exports and investment.

To support the momentum, Turkey’s central bank had lowered the key rate by 500 points since September to 14%, but kept it stable in three monetary policy meetings this year. It is expected to keep its one-week repo rate unchanged again on Thursday.

The government has relied on public lenders as they have increased lending throughout the pandemic, helping the economy avoid a contraction and begin a strong recovery.

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