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First EBRD private sector investment in Bosnia and Herzegovina
The European Bank for Reconstruction and Development (EBRD) signed today its first private sector investment in Bosnia and Herzegovina. The DM 2 million (ECU 1.1 million) equity investment in the share capital of Hrvatska Banka, Mostar, is designed to support a well-managed and dynamic young private bank and help restore confidence in the country's financial sector after years of war. The investment represents 17 per cent of the bank's shareholding of its enlarged capital.
David Hexter, Deputy Vice President of the EBRD, said upon signing: "The EBRD's equity investment in Hrvatska Banka is in line with its strategy in the financial sector of Bosnia and Herzegovina, which aims to strengthen private financial intermediaries, to increase the ability of the economy to absorb foreign funding and to ensure an efficient allocation of resources to the small and medium-sized enterprise sector." He continued: "The EBRD is working on additional equity investment opportunities in other parts of Bosnia and Herzegovina so that the benefits of its financing will be received by all areas of the country."
The investment will allow Hrvatska Banka to increase its funding base in support of an anticipated growth in lending and investment operations, to implement a viable business plan and to attract other shareholders and additional funding sources. The EBRD's investment will be conditional upon an extensive training programme in the form of a two-year twinning arrangement with a foreign bank and will be funded by EU Phare.
Registered in Mostar in November 1992, Hrvatska Banka began operations in April 1993 and operates as a commercial bank by providing a full range of services to private companies and individuals. Its network is composed of two branches and 18 business units, including three offices in Mostar. Hrvatska Banka is considering opening a branch in Sarajevo in 1997 and another branch in Tuzla thereafter.
The equity investment will be the EBRD's second financing in Bosnia and Herzegovina following a sovereign guaranteed infrastructure project to reconstruct the transport system, signed in December 1996. The EBRD has considerable experience with equity investments in private banks and has invested, to date, over ECU 240 million in 36 banks throughout its region of operations.
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