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Croatia's fourth largest bank receives EBRD financing
As part of its commitment to the financial and private business sectors in Croatia, the European Bank for Reconstruction and Development (EBRD) is providing a DM 20 million (ECU 10.5 million) convertible loan to Croatia's fourth largest bank, Varazdinska Banka d.d. (VZB) as well as taking a 10 per cent equity stake.
Commenting on the EBRD's first equity investment in Croatia's financial sector, David Hexter, Deputy Vice President of the EBRD, said: "By becoming a shareholder in Varazdinska Banka, the EBRD is contributing to Croatia's privatisation process, specifically through the provision of loans to the industrial sector. VZB will be able to introduce new financial products to the benefit of both borrowers and investors in the country."
The EBRD's investment will increase VZB's funding base and support its anticipated growth in lending and investment operations as a result of the country's accelerated privatisation and restructuring process.
VZB is to on-lend the loan and equity investment proceeds to clients needing medium and long-term financing for such projects as start-ups, upgrading or modernising production plants and processes, working capital loans and trade finance. VZB has already received applications for loans from a number of clients and is planning to advertise this funding line in order to attract new clients.
With 10 per cent of VZB's common shares, the EBRD's equity holding equals that of VZB's largest shareholder, Varteks, Croatia's largest textile group. The loan is convertible into VZB's common shares.
Established in north-west Croatia in 1956, VZB is currently 49 per cent privately owned, although this will increase to 55 per cent following the EBRD's investment. Its principal shareholders are mainly industrial and services groups, of which three are state-owned and four are private. As a universal commercial bank, VZB has developed over the last past five years into one of the strongest regional banks in the country.
To date, the EBRD has committed ECU 270.1 million (12 projects) in Croatia, of which ECU 58.7 million is in the financial sector.
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