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EBRD and Bankgesellschaft Berlin strengthen Latvian private sector through syndicated loan
To support the growth of private sector enterprises in Latvia, the European Bank for Reconstruction and Development (EBRD) and Bankgesellschaft Berlin AG (BGB) have jointly arranged a syndicated loan of EUR 30 million to Latvijas Unibanka, Latvia’s second-largest bank. The EBRD will provide a five-year loan of EUR 10 million for its own account, and a group of commercial banks will provide EUR 20 million with a three-year maturity.
"The EBRD’s syndicated transaction is the first loan to a Latvian bank since the Russian crisis," said Kurt Geiger, the EBRD’s Business Group Director for Financial Institutions. "This project will make a great contribution to rebuilding confidence in the market, and to convincing international investors that there are worthwhile investments in Latvia’s financial sector." He added: "As one of the leading banks in Latvia, Unibanka needs to maintain its financial position and its ability to retain the confidence of the population. This is important for the health of the local banking and private enterprise sectors. This project will, therefore, strengthen a key player in the Baltic economy, and will support Unibanka in meeting the demand for medium-term financing from the private sector."
"Thanks to the successful partnership between the joint-arrangers of this financing, six commercial banks are participating in this syndicated loan," said Tero Halmari, Senior Syndications Manager at the EBRD. "We appreciate this demonstration of trust towards Latvia and especially towards Unibanka."
Unibanka will use the proceeds of the loan to extend its private sector lending activities and to increase its support for small and medium-sized enterprises. The six participating banks are Bankgesellschaft Berlin AG, Landesbank Schleswig Holstein-Girozentrale, Banque et Caisse d'Epargne de l'Etat Luxembourg, American Express Bank Ltd., Raiffeisen Zentralbank Österreich Aktiengesellschaft and DG Bank Deutsche Genossenschaftsbank.
"The capital market in Latvia and in the Baltic region generally is reviving. After the collapse in August 1998 and the subsequent difficult investment climate, more and more syndicated facilities for borrowers in this region have been placed successfully. The strong demand for this transaction from the international financial community is also proof of a strong upturn," said Hagen Sinodoru, Deputy Head of Syndication at BGB.
Andris Berzins, President of Unibanka, said: "Latvia is currently restructuring its economy. Medium and long-term loans are vitally important to support this process." He continued: "This facility will allow Unibanka to access resources which are not yet available in Latvia and to provide medium and long-term funding to local businesses. In this way it will contribute to the country’s economic recovery."
Unibanka was founded in September 1993 as a state-owned commercial bank, and was formed by the consolidation of a number of branches of the Bank of Latvia. It was partly privatised with EBRD support in early 1996 and its shares were listed on the Riga Stock Exchange.
Bankgesellschaft Berlin AG was formed in 1993 as a holding company combining Berliner Bank AG, Landesbank Berlin and Berlin Hyp. Bankgesellschaft Berlin AG is the leading arranger for syndicated loan facilities for financial institutions in the Baltic region.
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