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Estonia's Eesti Forekspank receives new funding from EBRD
One of Estonia's leading banks, AS Eesti Forekspank (EFP), will receive a DM 4 million (ECU 2.1 million) 10-year subordinated loan from the European Bank for Reconstruction and Development (EBRD) to increase its capital base. This will be the second financing that EFP has received from the EBRD.
"The loan will enhance EFP's capital base, enabling the continued expansion of the bank's business activities, including its private sector loan portfolio. It will also strengthen EFP's position in the Estonian banking market and promote competition", said David Hexter, Deputy Vice President at the EBRD.
Last July the EBRD extended a two-tranche DM 12 million credit line to EFP to provide Estonian private sector enterprises with new medium-term financing. The first tranche of DM 8 million (ECU 4.2 million) is fully disbursed, and the loan will effectively replace the second tranche of the credit line.
The growth of EFP's deposit base, together with the recent success of Estonian banks in accessing two to three-year money on the international markets, means that capital, rather than term-funding, will be the principal constraint to EFP expanding its private sector portfolio and business operations. Consequently, EFP requested the EBRD to replace the uncommitted second tranche of the credit line with the subordinated loan to expand its capital base.
Founded in June 1992, EFP is now the fifth-largest bank in Estonia by shareholders' equity and by asset size, with a total market share of 6 per cent. It is 100 per cent privately-owned and its shares are quoted on the Tallinn Stock Exchange. EFP offers its corporate and retail clients a wide range of financial products at competitive rates.
At the end of January 1997, the EBRD's exposure in Estonia was ECU 149 million, of which ECU 50 million was in the financial sector.
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