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EBRD finances information technology systems of Banca Agricola in Romania
The largest commercial bank in Romania will improve and modernise its information technology (IT) system through a US$ 12 million (ECU 10.5 million) loan from the European Bank for Reconstruction and Development (EBRD) signed today in London. The loan, which follows a previously extended EBRD credit line of US$ 70 million signed in January 1993, will go to Banca Agricola S.A. (BA) and is the first EBRD loan to Banca Agricola without a sovereign guarantee.
Ron Freeman, First Vice President of the EBRD, said: "This project, designed to finance an investment in its information technology system, will allow Banca Agricola to strengthen its competitive position in the banking sector and provide the basic systems infrastructure necessary to do business rapidly and efficiently and with improved monitoring and control".
Banca Agricola is 48 per cent privately owned and is implementing a strategy to become majority privately owned. The EBRD's loan agreement with BA provides for the possible conversion of the loan into equity. The option to convert may be exercised by the EBRD in the context of BA's planned privatisation.
The project will achieve the strategic computerisation of BA's head office and nationwide branch network. The new IT system will enable BA to increase its business transaction volumes, diversify and expand its customer deposit base, and make major efficiency gains, particularly by limiting increases in staff numbers. It will also reinforce control procedures while maintaining decentralised decision-making at branch level. The specifications of the new system will place BA among the forerunners in automation in the banking industry in Romania.
In addition, ECU 635,840 in technical cooperation funds has been provided to assist BA in the management of the IT project implementation. A project management team, selected in consultation with EBRD, has been established to work directly with BA's project management team.
Banca Agricola S.A., founded 120 years ago as a private bank, was nationalised and incorporated into the National Bank of Romania (NBR) in 1947. Devolved from the NBR in 1968, it operated as a semi-autonomous unit serving the agricultural and food-related industries. Since September 1991 BA has been managed on a commercial basis with the objective of maximising profits. It has gradually diversified its loan portfolio while taking advantage of its large market share in agriculture, Romania's fastest-growing sector. With a network of 450 branches and representative offices, BA has strong capacity to attract resources through retail deposits. BA has been audited by an international firm of auditors each year since 1992 and has gradually improved its capital base over this period.
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