KfW Development Bank: Our Activities in Turkey

KfW Development Bank: Our Activities in Turkey KfW Office Ankara Bank aus Verantwortung

We Are Part of KfW Bankengruppe Domestic promotion International business We promote Germany We ensure internationalisation We promote development Business Area Mittelstandsbank Promotion SMEs, business founders, start-ups Business Area Privatkundenbank Promotion construction of new housing and modernisation as well as education Business Area Kommunalbank Financing municipal infrastructure projects and global loans Germany/Europe agency business for Federal Government Business Area Export and Project Finance International project and export finance Business Area Promotion of Developing and Transition Countries Promotion of developing and transition countries Promotion of environmental and climate protection 2

60 Years of KfW Financing with a Public Mission Promotional bank of the Federal Republic of Germany Founded in 1948 as Kreditanstalt für Wiederaufbau Shareholders: 80 % Federal Republic, 20 % federal states Headquarters: Frankfurt am Main Branches: Berlin and Bonn Representative offices: around 70 offices and representations worldwide Balance sheet total as at September 2013: EUR 476.4 billion Financing volume 2013: EUR 72.5 billion 5,190 employees (2012) Best rating: AAA/Aaa/AAA 3

Locations KfW Development Bank and DEG Mexiko-Stadt Guatemala-Stadt San Salvador Tegucigalpa Managua Bogotá Quito New York Dakar Bonn Köln Moskau London Berlin Brüssel Frankfurt Belgrad Kiew Sarajevo Priština Tiflis Istanbul Taschkent Podgorica Baku Bishkek Tirana Ankara Dushanbe Skopje Jerewan Rabat Al-Bireh Damaskus Amman Kabul Islamabad Neu-Delhi Kairo Abu Dhabi Bamako Accra Niamey Ouagadougou Cotonou Jaunde Kigali Kinshasa Addis Abeba Juba Kampala Nairobi Sanaa Daressalam Mumbai Kathmandu Dhaka Ulan Bator Bangkok Beijing Jakarta Hanoi Phnom Phen Singapur Manila Lima La Paz Brasilia São Paulo Windhoek Lusaka Pretoria Antananarivo Lilongwe Maputo Johannesburg January 2013 4

Funding KfW: One of the largest capital market issuers worldwide Triple-A rating of KfW bonds AAA Aaa Issue volume 2013 about EUR 72.5 billion Awards AAA Funding takes place mainly on the international money and capital markets, particularly in euros and US dollars. Other important currencies are the Australian dollar, British pound, Swedish krona, and Japanese yen. The offer of different currencies, maturities and structures is targeted in particular at institutional investors. KfW regularly receives awards from the specialised press and investors for its successful capital market activities. KfW bonds are also an important investment category for sustainable investors and have received top ratings within the group of financial institutions and development banks from renowned, independent SRI agencies. 5

KfW Bankengruppe in Turkey KfW Development Bank As development bank of the German Federal Government, KfW Development Bank offers long term financing for governments and public utilities as well as credit lines for local banks. DEG As development finance institution for the private sector DEG can provide both long term loans and investment capital (equity, mezzanine) for private investors. IPEX Bank IPEX Bank provides medium and long-term loans for export and project finance (incl. trade finance). 6

Total Commitment in Turkey EUR 5 billion EUR 5.7 billion EUR 0.7 billion Total Commitment of KfW Group: EUR 11.4 billion 7

Commitments 2010-2013 in Mio. EURO 1.000 902 800 IPEX DEG DB 336 703 600 400 200 0 83 278 424 354 364 75 63 171 156 95 48 483 59 350 139 206 205 2010 2011 2012 2013 planned 2014 8

International business: We promote development KfW Development Bank We promote economic and social progress in developing and transition countries to improve people's lives. Task As development bank of the German Federal Government, we provide support and advice for reform processes and investments in developing and transition countries Objectives Climate and environmental protection Promotion of the financial sector Sustainably improvement of economic and social conditions Partners Governments, other governmental and non-governmental institutions in developing and transition countries, and bilateral and multilateral donors Financing volume 2013 EUR 6.7 billion 9

Water & Sanitation Projects in Turkey Concluded On-going 10

Our Cooperation in the Financial Sector Target Groups and Products Micro, small and medium-sized Enterprises Investment Loan Energy Efficiency/ Environmental Loan Agricultural Loan Private Households Energy Efficiency/ Housing Improvement Loan Financial Sector Development Development of local capital markets We reach our target groups by working together with Financial Institutions 11

Example from our Project Work: Sekerbank Covered Bonds Short Description Objective Impacts First Covered Bond (CB) worldwide backed by receivables of a pool of SME Loans (Asset Pool) Sekerbank issues CB denominated in TL to raise funds to increase refinancing of its SME and Microfinance core lending business Sekerbank is addressing the financing needs of Turkish SMEs which are crucial for economic development and job creation Transaction has set an important benchmark and will contribute to the deepening of Turkish capital markets TL denominated CB as a new asset class in Turkish capital market Diversification of Sekerbank`s funding sources Reduction of asset-liability mismatches (short term deposits longer term loans) Model to be replicated by other financial institutions and in other markets 12

Example from our Project Work: Vakifbank MSME Finance Short Description Objective Facts Long-term credit facility to finance micro, small and medium-sized enterprises (MSME) in Turkey Min. 50 % of sub-loans shall have a maturity of more than 36 months Sub-loans up to TL 500.000 or EUR 167.000 Improve productivity and competitiveness of Turkish MSMEs and generate employment Expansion and deepening of financial sector Vakifbank: One of the leading MSME banks in Turkey with 744 branches Predominantly state-owned Credit facility: secured by guarantee from Turkish government and by German GWR-guarantee ODA-eligible 13

Our Cooperation in the Energy Sector In November 2012 the German Minister of Economics and Technology Philipp Rösler and the Turkish Minister for Energy and Natural Resources Taner Yildiz signed a joint declaration to establish a Turkish-German Energy Forum: Both sides will strengthen their cooperation in the field of energy in order to deepen their bilateral economic cooperation and to foster resource-efficient, environmentally-friendly and sustainable development. 14

Examples from our Project Work: Energy Efficiency in Public Buildings (under preparation) Investment component: EUR 110 million interest subsidized loan Accompanying measure: EUR 2 million grant for consulting services Technical Cooperation: EUR 6.5 million grant (GIZ) Funds extended by the German Federal Ministry for Environment and KfW Coordination for the FC component by the Ministry for Energy and Natural Resources Technical Guidance from the Ministry of Environment and Urbanization 15

Examples from our Project Work: We join forces with Turkish partner banks our credit lines TSKB: Climate Protection Programme, Energy Efficiency and Renewable Energy, Resource Efficiency Sekerbank: Energy Efficiency TKB: Municipal Infrastructure (under preprartion), Energy Efficiency and Renewable Energy 16

Tailor-made Financial Instruments for Financial Cooperation with Partner Countries German federal budget funds Loans at IDA conditions (in exceptional cases grants, e.g., for feasibility studies) FC Development Loans ( mix of budget funds and KfW s own funds) Mixed Finance Composite Finance Interest Subsidized Loans Conditions: 2-5 % Interest, 10-25 years of maturity, 1-4 years grace period FC Promotional Loans (KfW s own funds) FC Promotional Loan NEW INSTRUMENT: Covered Promotional Loan Conditions: Refinancing costs plus spread according to project risk structure Covered by guarantees from Turkish and German Government ODA eligible under current market conditions 17

Get in touch with us we will be happy to assist you! Dr. Marion Kneesch Director of KfW Office Ankara Marion.Kneesch@kfw.de Bülent Koc Project Coordinator Buelent.Koc@kfw.de Melih Cadirci Deputy Director Financial Sector Expert Melih.Cadirci@kfw.de Deniz-Nicole Kutlu-Isik Office Manager Deniz-Nicole.Kutlu-Isik@kfw.de Jülide Oguz Senior Project Coordinator Energy and Municipal Finance Expert Julide.Oguz@kfw.de KfW Office Ankara And Sokak No: 8 / 7 06680 Ankara/Turkey Tel: +90 (312) 428 84 15 Fax: +90 (312) 428 84 16 18