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EBRD and Rabobank to offer Russian agriculture new financial tool
The European Bank for Reconstruction and Development (EBRD) has joined forces with Rabo Invest, the Russian subsidiary of Rabobank International, to offer an innovative commodity-backed financing programme that will provide funding of up to €167 million (US$ 150 million) for the development of the Russian agricultural sector. The EBRD’s share will be €56 million (US$ 50 million).
This is the first project under the EBRD’s €112-million (US$ 100 million) Regional Warehouse Receipts Programme, which was approved by the EBRD’s Board this week. The aim of the programme is to introduce a new financial instrument to overcome the lack of seasonal financing that is one of the key problems of the agribusiness sector in transition economies. The programme draws on the successful experience of similar schemes in countries like Hungary, Bulgaria and Slovakia.
The scheme being launched in Russia by the EBRD and Rabo Invest is intended as a bridging mechanism to provide structured financing products for the agribusiness sector pending final approval of legislation to set up a fully-fledged warehouse receipt programme. The legislation, on which the EBRD has cooperated closely with the relevant committee of the Russian State Duma, will allow the use of these financial instruments as collateral and set up a system of warehouses under government inspection. In fact, EBRD and Rabobank, via implementation of this program, are setting a valuable precedent towards a more institutionalised warehouse receipt system.
Hans Christian Jacobsen, Director of the EBRD’s Agribusiness Team, said: "The EBRD joint financing with Rabo Invest will enable us to start providing seasonal financing to the Russian agribusiness sector while the institutional framework necessary to underpin the new system is put in place. This sector has significant potential that will only be realised once it can attract a substantial amount of commercial financing. The use of warehouse receipts could help achieve that goal."
Alexey Belyaev, the General Director of Rabo Invest, said "Rabo Invest has established a strong position on the Russian agricultural commodity markets, and we have developed a structure which is adapted to the current Russian environment." Maarten Pronk, Rabobank Country manager for Russia and Chairman of the Board of Directors of Rabo Invest, added: "The participation of EBRD in this financing is very important, not only because of its demonstration effect, or because it enables us to increase the size of the programme, but mainly because it is the beginning of a co-operation between the EBRD and Rabobank to provide a solution for much-needed financing to the Russian agribusiness sector."
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