The European Bank for Reconstruction and Development (EBRD) has provided a TL 100 million loan to Turkish non-performing loan (NPL) management firm Hayat Varlık.
"In a move to help Turkey tackle the increase in NPLs in its banking sector, the EBRD is supporting the country's leading NPL management firm," the bank said in a statement on Monday. Hayat Varlik will use the loan to buy new distressed portfolios from local lenders and financial institutions.
Saying that the banking sector is a key anchor for Turkey's economy, the EBRD noted: "[The sector] is under stress following the lira's depreciation and a sharp slowdown of the economy."
"An increase in NPLs can affect banks' cost of funding, profitability, and may impair their capacity to lend to the real economy," it added.
With the loan by the EBRD, which has an existing 12 percent stake in Hayat Varlik, the firm's NPL management capacity will rise. "The Bank has also provided the company with TL 120 million in loans and has mobilized TL 60 million parallel in financing from ICBC Turkey," it said.
The EBRD invested 1 billion euros ($1.14 billion) in a total of 34 projects in Turkey last year and the bank plans to invest the same amount this year.
Since 2009, the EBRD has invested over 11 billion euros in various sectors of the Turkish economy, with almost all of this investment going to the private sector. The bank's 7-billion euro Turkey portfolio is the largest among the 38 economies where the bank invests.