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EBRD to grant credit line to Latvian bank
A loan from the European Bank for Reconstruction and Development (EBRD), signed today in Budapest, will strengthen small and medium-sized enterprises (SMEs) in Latvia. The two-tranche credit line of US$ 12 million (ECU 9 million) will go to the joint-stock company German-Latvian Bank (DLB) and will enable the bank to increase its medium-term lending to the private sector and particularly to SMEs.
David Hexter, Deputy Vice President of the EBRD, said: “This first international bank-to-bank credit line to DLB will play a major role in the development of the Latvian private sector. The loan is designed both to provide medium-term funding for SMEs and state enterprises embarking upon a well-defined route to privatisation, and to promote competition among Latvian banks''.
The loan of two equal tranches of US$ 6 million (ECU 4.5 million) will finance medium-term investment projects of up to US$ 1.5 million each. DLB has a healthy pipeline of sub-projects covering a wide range of economic sectors, including the agricultural, construction, medical, glass fibre production and port services sectors.
US$ 5 million (ECU 4 million) will be financed by the Baltic Investment Special Fund. Of the remaining US$ 7 million (ECU 5 million), US$ 2 (ECU 1.5 million) will be syndicated to the Hungarian National Savings and Commercial Bank Limited (OTP). This transaction is notable that the EBRD has syndicated part of a loan to a bank in one of its other countries of operations, helping to foster international trade and cross-border relations between banks in eastern Europe and the former Soviet Union.
Having started its operations in October 1992, with a wholly private ownership, DLB has established itself as a customer-oriented and innovative universal bank. Currently, it employs around 150 people and is among Latvia's ten largest banks. DLB targets its products to SMEs with a sound financial track record and to higher net worth individuals. Over the past 12 months, the bank has begun expanding its retail account base and loan portfolio within these chosen market sectors, while at the same time reducing its domestic inter-bank exposures.
The Baltic Investment Special Fund, established in April 1992 between the EBRD and the Governments of Denmark, Finland, Iceland, Norway and Sweden, promotes private sector development through support for SMEs in Estonia, Latvia and Lithuania.
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