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EBRD and Pol'nobanka assist the Slovak agribusiness sector
To provide short-term financing to farmers and other agribusiness entities in the Slovak Republic, the European Bank for Reconstruction and Development (EBRD) has signed a co-financing agreement with Pol’nobanka for DM 32 million (ECU 16 million). EBRD financing of DM 16 million will be provided, through the State Fund for Market Regulation (SFMR), jointly with Rabobank of the Netherlands. Pol’nobanka will contribute the remaining DM 16 million, and will manage the programme, which will provide financing through warehouse receipts. In the near future the three banks wish to increase the total funds provided through the programme to up to DM 100 million per year.
Hans Christian Jacobsen, Director of the EBRD’s Agribusiness team, said: "The use of warehouse receipts is a proven way to finance the agribusiness sector in several countries, as they allow banks to take security over grain stored in licensed warehouses. By co-financing with Pol’nobanka, the EBRD wants to show its support for a scheme that could be one of the ways to solve the chronic lack of working capital financing across the food chain in central and eastern Europe. The early involvement of the EBRD will help the development of the system in the Slovak Republic and in other countries."
FrantiĊĦek Palic, Chairman of the Board of Directors and General Director of Pol’nobanka, added: “We have been working with the Ministry of Agriculture, for more than three years to design the necessary legal framework, and the procedures to be used. If, as we expect, the programme is successful, it will become one of the preferred ways to provide financing to the agribusiness sector in our country."
Zoltan Cernak, Head of Agrarian Policy of the Ministry of Agriculture said: "Warehouse receipts are a key piece of our agricultural policy. Their use will increase the sources of financing available for farmers, reducing the impact of carrying costs and seasonal price fluctuations, without distorting the functioning of the markets. The implicit guarantee provided by the SFMR in the first phase has permitted the participation of the EBRD and Rabobank, showing the way for other commercial banks in the future."
Rabobank added: "We have long experience of financing commodities using warehouse receipts all over the world. We participate in the Slovak programme because we think it is well designed, the law provides adequate protection for lenders and Pol’nobanka has the capabilities to handle it successfully."
Pol’nobanka (PB) is the second largest provider of financing to the agribusiness sector in the Slovak Republic. Founded in 1990, it has become the fourth-largest bank and one of the largest private financial institutions in the country. PB is based in Bratislava and has 16 branches and 20 sub-branches. The EBRD has been a shareholder of PB since 1993, with 20 per cent of its capital.
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