The European Bank for Reconstruction and Development (EBRD) has provided a US$50mn facility to Istanbul-headquartered lender Türk Ekonomi Bankası (TEB) to support its expanding trade finance business.

The financing, announced in late August, is intended to help the Turkish bank “diversify its trade finance business, increase available limits and offer longer maturities to customers, supporting cross-border trade and contributing to the overall economic growth of the country”.

The facility builds on the EBRD’s strong presence in Turkey, where its current €7bn portfolio is the largest in any of the 38 economies covered by its regional scope. To date, it has provided nearly €14bn across 349 projects in the country.

TEB, the seventh-largest private bank in Turkey, has a strategic partnership with French lender BNP Paribas and targets retail, corporate and SME clients in the country.

In its Q1 2021 results, the bank says it has increased its support to Turkish SMEs involved in exporting goods.

Giving the example of jewellery producers, which it describes as “one of the engines of Turkey’s export trade”, the bank has introduced a gold-based credit product aimed at supporting working capital requirements, which has a 24-month term and flexible repayment options.

It has also sought to digitalise the provision of working capital support to agricultural producers, and has introduced a credit card-based product for purchasing agricultural inputs interest-free for five months, TEB says.

The US$50mn financing arrangement is made under the EBRD’s Trade Facilitation Programme, which aims to promote cross-border commerce by providing guarantees to confirming banks, as well as short-term loans to lenders and factoring companies that are on-lent to local businesses.

Since the start of the Covid-19 pandemic, the programme has expanded significantly. In March last year the bank provided a record €385.6mn in trade finance, spanning 144 transactions, only to break that record the following month by exceeding €500mn in support.

Across the whole of 2020, the EBRD delivered €3.3bn in trade finance – also an annual record – which it says was aimed at helping target markets overcome the economic impact of the pandemic.

The EBRD facility is the latest in a series of financing arrangements granted to Turkish companies. Earlier in August, it invested US$75mn in a green bond issued by Aydem Yenilenebilir Enerji, which focuses exclusively on renewable energy sources including hydro power, wind power and geothermal plants.

The company raised a total of US$750mn through the bond, which EBRD says is the largest green corporate Eurobond issued in Turkey to date. It was oversubscribed by more than 100%, it adds.

In July, the bank arranged a €650mn loan to Ford Otosan, a joint venture between US automobile giant Ford and Turkish firm Koc Holding. The project is intended to establish an electric vehicle hub for Ford in Europe, based east of Istanbul in the province of Kocaeli.

The EBRD has warned, however, that proposed EU carbon emissions rules – part of the European Green New Deal – could result in Turkish exporters of energy-intensive products such as cement, steel and aluminium having to pay extra charges of between €399mn and €777mn, depending on the rules’ eventual scope.