JP Morgan has signed a deal to provide a US$250mn trade finance facility to Turkish lender VakıfBank to fund recyclable steel scrap and renewable energy imports.
The agreement is 95% backed by the Multilateral Investment Guarantee Agency (Miga), part of the World Bank Group, under its trade finance guarantee programme – the first time this has been awarded to a Turkish commercial bank, Miga said.
JP Morgan was the sole funding bank on the deal, which will see the scrap steel melted in electric arc furnaces to produce sustainable steel. The facility will also be used to import “wind turbines and related components to support the country’s energy transition”.
Osman Arslan, chief executive of VakıfBank, said the transaction aims “to support the financing of export and renewable energy-focused sectors that will contribute to Türkiye’s economic growth objectives”.
Tsutomu Yamamoto, managing director of Miga, noted that “Türkiye is a top 10 steel producer globally”, which means importing recyclable steel scraps is vital to allow the country to reach its sustainable development goals.
Mustafa Bagriacik, senior country officer for Turkey at JP Morgan, added that the facility will “mobilise cross-border financing and support the flow of trade”.
In March, VakıfBank secured a €1.5bn 10-year financing facility involving lenders BNP Paribas, ING, Santander and Standard Chartered, and partially guaranteed by the International Bank for Reconstruction and Development.
The facility enables access to finance for MSMEs across Turkey, with a focus on women and young entrepreneurs, in addition to supporting economic recovery in regions affected by the 2023 earthquake.
Earlier this month, Miga added a new sovereign-backed guarantee capability to the International Finance Corporation’s global trade finance programme. It said an initial US$500mn in capacity would be deployed on a facility-by-facility basis.
