|
EBRD establishes micro and small finance bank in Russia
As part of its strong and continuing support for the development of the private sector, the European Bank for Reconstruction and Development (EBRD) has established a bank to assist micro and small enterprises in the Russian Federation.
"Small and medium sized enterprises form the backbone of a vibrant market economy," said Elizabeth Wallace, Senior Banker and Operations Leader of the Russia Small Business Fund in the EBRD’s Financial Institutions Team. "In Russia in particular, they have a major role to play in generating economic growth and income, and in encouraging competition. This new bank will nurture the growth of Russian micro and small enterprises by helping them to gain access to loans that would otherwise be unavailable, creating jobs and fostering economic growth. It signals that the EBRD remains committed to Russia and to continuing to support the country’s real economy."
The new bank is being created under the auspices of the Russia Small Business Fund (RSBF) , which works to strengthen the capacity of Russian banking institutions to lend to micro and small businesses. The RSBF works with several partner Russian banks in each region to maintain a high level of competition and customer service. This bank is the newest partner bank to join the RSBF. The RSBF has contributed equity to the new bank’s recapitalisation and the bank will have access to RSBF loans for on-lending to micro and small enterprises in regions across Russia. The RSBF will continue to work through viable Russian banks.
Since 1994 the RSBF has made more than 26,000 loans, totalling more than US$ 370 million, to entrepreneurs in towns and cities across the Russian Federation. The average loan was US$ 14,000; the largest was US$ 125,000 and the smallest just $30. These loans have helped to create or protect some 600,000 jobs. The programme is active in 23 regions across the country.
The new bank will work directly with individual entrepreneurs and businesses, and will demonstrate the earning power and stability of a bank built on sound banking practices and dedicated to micro and small business lending.
The EBRD’s financing will consist of a US$ 6 million equity investment to help fund the reorganisation and recapitalisation of an existing financial institution, the Russian Project Finance Bank, in which the EBRD is a principal shareholder. The EBRD has also provided a US$ 30 million loan to the bank for on-lending to Russian businesses.
"The large number of credit requests already processed by the RSBF’s participating banks reflects substantial demand for micro and small financing in Russia," said Reiner Mueller Hanke, General Manager of the Russia Project Finance Bank. He continued: "The new bank will increase the availability of financing for small businesses and contribute to the long-term growth of a competitive micro and small lending market."
The RSBF programme was conceived as a way to stimulate new, viable production and employment. It received a great boost in 1993 when the Group of Seven nations (and later Switzerland) pledged US$ 150 million at the 1993 Tokyo Summit, to be matched by the EBRD. The first loans were disbursed in 1994.
|
