1. 0 Ahmet KILICOGLU September 13, 2007 (Prague, Czech Republic) NEW CHALLENGES FOR ECAs OPERATING IN EMERGING / FAST GROWING MARKETS

2. 1 ECAs confront substantial changes in business environment  Tough competition (private insurers in ST)  More experience and technology brought in by the private sector  Shift from standardized products & basic business model  Requirement for more sophisticated/tailor-made solutions  Customer satisfaction concern  Sharper questioning from own governments about proper role of public sector especially after EU Directives  Increasing pressure from NGOs on ECAs CHANGING ENVIRONMENT FOR ECAS - 1 Prague 2007

3. 2 ★ European ECAs set up subsidiary organizations to separate their “government account business” from export credit business. ★ Government-backed export business shrinks in the total export volume in major exporting countries. ★ WTO requirements for ECAs to “break-even”. ★ Changing nature of borrowers in export credit business from project and commercial borrowers rather than governments. ★ Mandate of guardian authorities to support SMEs. CHANGING ENVIRONMENT FOR ECAS - 2 Prague 2007

4. 3 ★ Official ECAs are mostly left with:  longer maturities  riskier countries/risks ★ ECAs will remain critical financial partners/financiers in taking M/L-T risks in developing countries. CHANGING ROLE OF ECAs Prague 2007

5. 4 ★ Missions are same ★ Developed country ECAs more flexible – more financial resources, technology ★ Developing country ECAs – continue traditional role - fill in the gap of their banking sector– cover ST – have to pursue the export-led growth strategies of own gvts. DISTINCTION BETWEEN DEVELOPED & DEVELOPING COUNTRIES’ ECAs Prague 2007

6. 5 ★ Risk diversification ★ Left with high risk – long maturity ★ Rules to be followed (WTO, OECD, EU Directives, Paris Club) ★ Break-even mission by own gvts ★ High pressure from own gvts for efficient utilization of limited public resources ★ Less flexible to adopt to changes (products, technology, experience) ★ Direct lending, insurance & guarantee functions together CHALLENGES FACING THE DEVELOPING COUNTRIES’ ECAs Prague 2007

7. 6 TURKISH CASE - TURK EXIMBANK June 2006 ★ Export-led growth strategy of all gvts; establishment of Turk Eximbank in March 1987. ★ Immature financial market – indispensable in times of crisis - Direct lending, insurance and guarantee functions, ST being highest portion ★ Turkey – WTO Member, OECD Member, EU Candidate ★ Customs Union with EU as of Jan. 1996; issuance of Communiqué (Export 96/12) for “Officially Supported Export Credits” parallel to major disciplines of the OECD Arrangement.

8. 7 For 2006;  Total Assets : $ 2.9 billion  Total Loans / Total Assets : 82 %  Capital Base : $ 1.63 billion  $ 3.5 billion in loans and $ 4.3 billion insurance cover Total $ 7.8 billion support (9 % of the Turkish exports)  Rating: Same as the Turkish Treasury : Standard & Poor’s : BB-, Stable Outlook Moody’s : Ba3, Stable Outlook GENERAL FINANCIAL OUTLOOK Prague 2007

9. 8 THE TURKISH EXPORT CREDIT INSURANCE MARKET THE TURKISH EXPORT CREDIT INSURANCE MARKET ★ Turk Eximbank- sole official export credit agency – market leader with the lion-share ★ 3 big players operating since recovery from crisis– provide combined cover (export + domestic credit) Result: less appetite from the market for export credit insurance cover ★ Obligation of Turk Eximbank due from EU Directives in search of removing distortions of competition due to state-aid  seperate entity to be established Prague 2007

10. 9 CHALLENGES FACING TURK EXIMBANK ★ Plan to set up a subsidiary entity for export credit business along with supplementary products ★ Transposition of the EU Directives into national Law (amendment of Bank’s Law ) –2 Directives under External Relations Chapter ★ Rules to be followed (WTO, OECD, EU, Paris Club, Basel II) ★ Core business is mainly ST – reluctance of other financial institutions ★ Gvt’s export policies – very high risk countries Prague 2007

11. 10 ★ ECAs will always be critical financial partners / financiers for high-risk countries/ business. ★ ECAs of developing countries are indispensable actors for their economies. CONCLUSION Prague 2007

12. 11 THANK YOU ! June 2006