REGIONAL DEVELOPMENT AND TURKEY STRATEGIES OF INVESTMENT BANKS
Shareholding structure of The European Investment Fund is composed of European Investment Bank (EIB - % 61), European Commission (% 30) and 30 public and private organizations (% 9).
Industrial Development Bank of Turkey (TSKB) is a shareholder of EIF since September 2006. EIB has actively contributed to the development of venture capital sector in Turkey during last three years. This was realized through investing 54 million EUR to independently managed funds, Actera Partners and Turkish Private Equity Funds II and implementing tailor-made program for Turkey, Istanbul Venture Capital Initiative (iVCi). iVCi is fully managed by the funds of European Investment Fund and mutual funds and allocated to Turkey. Last closing was on March 31, 2009 and worth 160 million EUR. Investors of iVCi are Small and Medium Enterprises Development Organization (KOSGEB), Technology Development Foundation of Turkey (TTGV), Development Bank of Turkey (TKB), GarantiBank, National Bank of Greece, and European Investment Fund (EIB 2011).European Investment Bank has been active in Turkey since mid-1960. The amount of financing the Bank provided to this EU candidate country between 2001 and 2005 reached 3.1 billion EUR. This number also underlines commitment made for the country’s economic development. Public and private members of the sector which benefited from EIB funds are foreign investors, central and regional administrations, regional banks and industrial organizations (DEIK, 2011a). During its activities in Turkey for more than 40 years, European Investment Bank has invested around 15 billion EUR to country’s economy.
Sectors supported by European Development Bank (EIB 2011):
Figure 1. Distribution of credits according to sectors: 2005-2010
Source: EIB 2010
Energy production, transportation, storing and distribution (renewable energies including electricity, petroleum, gas, wind and solar energy)
Energy efficiency
Industry
Information technology and media Infrastructure (including municipal and environmental infrastructure)
Manufacturing
Research and Innovation
Services
Small and Medium Enterprises (SMEs)
Tourism
Telecommunication
Transportation (including transportation infrastructure, railroad cars, buses, subways etc.)
As can be seen in Table 3, Turkey has received various credits from European Investment Bank; and the majority is for the development of SMEs.
These credits are granted based on certain conditions and limits.In July 2010, European Investment Bank launched Greater Anatolia Guarantee Facility (GAGF). This regional development enterprise targets SMEs and micro-enterprises in 43 cities in Turkey. GAGF project gathers two powerful projects of EIB Group which are long-term loans and sharing portfolio risk. It aims to create a credit volume around 500 million EUR for SMEs and micro-enterprises in the underdeveloped areas in Turkey covering a credit of250 million EUR from EIB and a resource of 32 million EUR from EU’s Instrument for Pre-Accession Assistance (IPA) (Bacak, 2007:6-28).
From 1976 to 1998, Islamic Development Bank financed projects and commerce worth $2.4 million in Turkey. In that period, the bank provided the second most credit opportunities to Turkey after Pakistan among its member countries. $1.7 million of those credits were allocated to finance import, while $184 million was allocated to finance export. One fourth of the whole credit was granted to finance projects in social and private sectors. In this period, the bank approved credits for infrastructure, industry, health, transportation, energy, education, agriculture and financial sectors. While all the credits in these areas were given to public sector, those regarding the trade were given to private sector(IKB 2011).
Since 2003, Islamic Development Bank opened credits to many public and private projects or trade financing. Recently, Islamic Development Bank extended its credit opportunities to SMEs. With the help of Participation Banks, they have opened $60 million credit in Turkey(IKB, 2011).
Islamic Development Bank generally grants investment credits to public sector, while they mostly grant financial loans to private sector for export. However, after 2008 economic crisis they have begun to open credits to SMEs in Turkey. The bank assures equal distribution of credits not
Table 3. Credits that European investment bank will grant to Turkey
| Who Can Apply | Credit Limit | Credit Rates | Terms | |
| Energy and Environment II Credit. | Small and medium sized renewable energy facilities. | Should not exceed 25 million euro, maximum % 50 of investment costs will be financed. | Based on evaluation. | Based on evaluation. |
| Credit for Developing SMEs with Resources. | SMEs operating in industry and tourism with investment less than 25.000.000 Euro and employees fewer than 500. | Maximum 12.500.000 Euro. | Based on evaluation. | Based on evaluation. |
Source: EIB 2011
Table 4.
Credits given by Islamic development bank in Turkey| Who Can Apply | Credit Limit | Credit Rates | Term | |
| Investment Credit. | Investors with external loan prediction under Financing The Investment part on Investment Incentive Certificate. | Minimum $500.000, Maximum $10.000.000. | Credit can be granted for the %100 of the equipment costs. | Based on evaluation. |
| Import Financing Credit Intended for Export. | Using the imported products on credit in the production of export goods. | Between 100.000,- Euro and 2.000.000,- Euro. | While financing import transactions, a loan up to %80 of the import volume can be used. | Based on goods financing import and the terms of the credit. |
| Investment Credit. | Used in financing the investors buying domestic and imported machines-equipment and assembling costs of machines- equipments. | Minimum 35.000 Islamic Dinar (ID), maximum 3.500.000 ID (1 Islamic Dinar = 1 SDR). | Based on evaluation. | Terms up to 10 years and maximum a 3 year grace period. |
Source: IDB 2010
through Eximbank or Turkish Industrial Development Bank, but through commercial banks. See Table 4 for the recently granted credits.