Improving the Role of Eximbanks/ECAs in the OIC Member States
83
 Its business volumes relative to the size of the Turkish economy are large, equal to more
than 20% of exports, compared to an average in OECD countries traditionally around 5
to 6%
 It is classified by the national bank supervisor as a development and investment bank,
subject to the government’s rules on capital adequacy and is in the process of
implementing Basel II guidelines. Other Eximbanks globally (e.g. in the US or Canada) are
not subject to these same rules in their countries.
As a company owned by the Turkish Treasury, it also has a unique feature in terms of the manner
in which the government provides financial backing. Any loss incurred under the credit,
guarantee and insurance programs due to political risks are covered by the Turkish Treasury and
compensated appropriately (although with a delay likely greater than if the business had been
reinsured by the private market). In other countries, with similar corporate forms, the
institution’s reserves and capital are usually the first buffer against such loss, except if there is a
specific program or national interest account that takes exceptional risks. The logic behind this
arrangement is that the fundamental collateral of the foreign country credits is the sovereign
guarantee of the counterpart country which is in the purview of the Treasury.
The limits of foreign country loans are set by the Annual Programs within the foreign economic
policy of the Turkish Republic by the Supreme Advisory and Credit Guidance Committee (SCLGC)
and approved by Council of Ministers. Individual country credits are granted with the approval of
the Board of Directors and the approval of the Minister. The Board of Directors has authority to
approve transactions with credit periods of 2-year or longer for up to USD 20 million.
Türk Eximbank has a long history of working with Turkish and foreign banks. Its current
strategy is to focus more on the Medium- and Long-Term Trade and Project Finance Programs
and Export Credit Insurance/Guarantee Programs, playing an active role as a catalyst with other
financial and related institutions to reach Turkey’s goal of exports of USD 500 bn by 2023, the
centenary anniversary of the Turkish Republic. Türk Eximbank, in line with its new vision and
strategy, will concentrate on guarantee and insurance programs and medium and long-term
credits, shifting its focus to be more like the Europe ECAs, which provide insurance to banks to
lend, rather than lending directly.
Türk Eximbank’s example has certain features which can be a good model to adapt to other OIC
countries:
1. Nature of government support: Government support to an ECA on certain types of risks is
helpful as it frees up the entity’s reserves and capital in the event of a loss. Similarly, the
Turkish Treasury covers political risks on Türk Eximbank programs and provides
compensation in the event of related losses.
2. Partnerships to benefit clients: The Bank prioritizes partnerships as an instrument to
further its main objective, which is to support Turkish exporters. Hence it has forged
relations with peer institutions and international financial institutions aimed at promoting
the financing of projects involving local businesses and foreign entities, both within Turkey
and abroad.