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EBRD extends SME credit line to bank in Uzbekistan
The role of UzPromstroy Bank (UPB) in providing scarce long-term funding for small and medium-sized enterprises (SMEs) in Uzbekistan will be enhanced with a US$ 15 million SME credit line extended by the European Bank for Reconstruction and Development (EBRD).
"This facility will enable the EBRD to provide much-needed funding for Uzbek small and medium-sized enterprises," said Kurt Geiger, Business Group Director of the EBRD’s Financial Institutions team. "SMEs form the backbone of a vibrant market economy, and the EBRD’s credit line will not only strengthen local financial institutions but will continue to assist SME development in the country."
The credit line will allow UPB to develop credit analysis skills, which have been stunted by the bank’s heavy reliance on non-commercial lending. It will also enhance competition in the banking sector, enabling UPB to compete with its major rivals, such as NBU and Asaka Bank, in badly needed finance for SMEs.
The institutional development of UPB will be assisted through the hiring of a Senior Credit Advisor to oversee the credit line and through a technical assistance programme from the World Bank. These measures will enhance the bank’s position in the local market as a competitive and universal banking institution. They will also facilitate the privatisation process of UPB, which has already been initiated by the Government of Uzbekistan.
UPB evolved from Promstroybank, one of the largest banks in the former Soviet Union, which was established in 1922 to serve the industrial sector. In 1991, the bank was reorganised and acquired its present status. Over the last eight years, UPB has acted mainly as a financial intermediary in the Government’s lending to large state-owned entities in such sectors as oil and gas, the chemical industry, construction and aircraft manufacturing.
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