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EBRD signs first Croatian bank agreement under framework facility
In support of Croatia's private sector, the European Bank for Reconstruction and Development (EBRD) has developed a DM 60 million (ECU 34 million) framework facility for medium-sized financial institutions. Under the framework it has signed its first DM 10 million agreement with the Zagreb-based Trgovacka Bank d.d.
"By developing this framework facility the EBRD is able to increase its activity with selected medium-sized Croatian banks and their clients, which are mainly small and medium-sized enterprises", said David Hexter, Director of EBRD's Financial Institutions team. "It will encourage Croatian banks to provide a wider variety of banking services and be in a position to meet the long-term financing needs of their clients in a market where sources of long-term funding do not at present exist".
Six Croatian banks will be signed under the programme over the next two years, each with a minimum loan of DM 5 million with a five-year maturity. The banks are selected on the basis of their financial health, the quality of their management, their commitment to expanding lending operations, the quality of their clients, and their willingness to finance small and medium-sized enterprises.
Sub-loans will be used to fund medium and long-term projects or investments for the creation, modernisation, expansion and diversification of industrial and production facilities. Only private sector companies will be eligible for loans under the EBRD financing.
The private sector share of Croatia's GDP has risen steadily over the past few years, encouraged by the liberalisation of markets and the increase in trade. The private sector accounts for at least 45 per cent of GDP, possibly more when allowance is made for those activities that are not covered by official statistics.
To date, the EBRD's involvement in Croatia's financial sector has been limited to its cooperation with Zagrebacka Banka and two agribusiness lines of credit to Damatinska Banka and Agro-Obrtnicka Banka.
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