|
EBRD financing for Inkombank to boost small and medium Russian businesses
A US$ 53 million (ECU 47.2 million) loan from the European Bank for Reconstruction and Development (EBRD) to JSB Inkombank will help to meet the demand for term-financing from small and medium-sized enterprises in the Russian private sector. The EBRD has also agreed to an equity investment subject to identifying a suitable partner.
Jacques de Larosière, President of the EBRD, said upon signing: "By supporting the growth of one of Russia's leading private banks, the EBRD financing package will contribute to the development of the local banking sector and will promote the investment activities of small and medium-sized businesses in the Russian private sector."
Vladimir Vinogradov, President of Inkombank, added: "We are delighted to welcome the EBRD financing package. We believe that the EBRD's involvement is not only an endorsement of our policy of open and transparent management of Inkombank but it will also help us continue our development as a major force in the financing of the Russian economy."
The US$ 53 million five-year credit line will allow Inkombank to fund medium and long-term industrial investment projects undertaken by private sector enterprises established and operating locally. This is especially important in the Russian market, where long-term funding is scarce.
The equity investment may be undertaken during 1998 through the purchase of a 10 per cent stake in Inkombank under an agreed price formula. The principal condition is the identification of a suitable strategic partner to take a 10 per cent stake alongside the EBRD. In the short term, the EBRD and Inkombank are finalising arrangements whereby the EBRD will purchase a smaller stake of 2.28 per cent in Inkombank, without waiting for a strategic investor. Terms will be announced once documentation and regulatory approvals are finalised.
These capital injections will help Inkombank to boost its capital base and to expand its balance sheet far beyond the level of capital injected. Such investments in commercial banks are a priority area for the EBRD since undercapitalisation is an important financial constraint to the development of the region's financial sector.
Established in October 1988 as a limited partnership by eight founding companies, Inkombank is the fourth-largest bank in Russia in terms of assets. Its target market is corporate and middle to high-income retail clients, and it provides its customers with a full range of commercial banking products. Inkombank's key long-term objectives are to develop as a universal bank with a wide retail customer base and to develop strong project financing capabilities in support of industrial investment activities.
To date, the EBRD's experience with Inkombank has been mainly through the Financial Institutions Development Project and the Russia Small Business Fund.
At the end of October 1997, the EBRD had committed ECU 2.3 billion to both private and public sectors in Russia.
|
