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EBRD helps to increase home ownership in Estonia
To encourage wider home ownership and to support the private home-building and rehabilitation sector in Estonia, the European Bank for Reconstruction and Development (EBRD) is providing Eesti Hoiupank (EHP), Estonia's second-largest bank, with a housing finance facility of DM 15 million (ECU 8.5 million).
"As the leading retail savings institution in Estonia, Hoiupank was the first bank to offer housing loans on a short-term basis. The secured bank-to-bank loan will allow EHP to expand its range of products and provide its private clients with long-term facilities for the purchase of their principal private residences," said Jonathan Harfield, Head of the EBRD's Tallinn Office.
He added: "Helping private sector banks to offer a full range of banking services is particularly important in small countries such as Estonia, where the financial sector plays a pivotal role in providing finance for the development of all sectors of the economy and where growth in private home ownership is a key element in the transition to a market economy. This is the EBRD's second housing finance facility to a Baltic bank."
The demand for housing loans in Estonia over the next two years is expected to be in excess of DM 187.5 million (ECU 106 million). EHP is already processing a pipeline of some 350 housing loan applications and anticipates that the housing finance facility will be fully disbursed within one year.
In June 1995, the EBRD took a 27 per cent equity stake in EHP which was subsequently diluted to 17 per cent following two international share issues. In addition, the EBRD signed a DM 13 million credit line, half of which was funded from the Baltic Investment Special Fund, to finance mainly private sector enterprises. The credit line is fully disbursed.
In March 1996, the EBRD's first housing finance facility was extended to Hansapank (HP) for DM 12 million (ECU 6.5 million). The project has progressed as expected, with approximately half of the facility disbursed.
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