Turkish bank to stop funding coal projects

Turkey's Garanti Bank, the country's fifth-largest bank by asset size, has said it will no longer fund new coal-fired power plants or coal mining projects.

Garanti bank, which is partly owned by Spain's BBVA, said it has not financed a new coal project since 2014 but has committed to reducing its existing loan portfolio on coal projects to zero by 2040. The bank said renewables constitute 73pc of its project finance portfolio with a total loan size exceeding $5.3bn, but it did not disclose the amount of outstanding loans it has issued for coal projects.

The announcement is unlikely to have a significant impact on imported coal investments in the country as the 1.3GW Emba Hunutlu plant, which is expected to start operations later this year, is the only imported coal-fired project in the short-term pipeline and the project has already secured financing.

The bank's decision has the potential to affect domestic coal mining and domestic coal-fired generation projects, which are supported by the government to reduce reliance on energy imports. But these projects could still be financed by other banks, including state-owned banks with larger asset sizes than Garanti, which have no commitments to stop financing coal.

Another Turkish private bank, Yapi Kredi, which is partly owned by Italian bank Unicredit, said it is supporting the Turkish economy's transition to a lower-carbon economy after issuing $50mn of green bonds last year, although it did not provide an official deadline for when it will cut off coal financing.

By Firat Ergene