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EBRD backs creation of Bulgarian micro bank
The European Bank for Reconstruction and Development (EBRD) today agreed to become both a shareholder in and lender to Bulgaria's first bank dedicated to small businesses, ProCredit Bank.
ProCredit Bank, which is due to open for business in the autumn, will provide financial services to micro and small enterprises (MSEs), a sector which is not yet well served by traditional banks. It will start operations in Sofia, with the aim of covering 12 regions within two years and will provide commercial loans as well as normal retail bank services including current and savings accounts. The bank will focus particular attention on loan applications from small companies and single entrepreneurs, which it expects will average below €10,000 per case. The bank can, however, make an individual loan up to a maximum of €125,000.
The EBRD will provide €1.23 million in equity and a loan of €5 million. The total cost of the project is estimated at €24.14 million.
The EBRD actively supports the growth of small business through banks dedicated to helping micro and small enterprises, such as ProCredit Bank. Efficient, specialised banks for micro and small businesses can help many people improve their living conditions. MSEs are also an engine of growth and an important creator of jobs.
The EBRD is one of five founding shareholders, each with a 20 percent stake in ProCredit Bank. Other investors are Commerzbank AG, International Micro Investitionen AG, DEG - Deutsche Investitions - und Entwicklungsgesellschaft mbH and the International Finance Corporation. Kreditanstalt für Wiederaufbau (KfW) of Germany has coordinated the development of the project and is expected to provide a credit line for on-lending to MSEs.
ProCredit Bank is the latest addition to a growing network of micro banks established throughout southeastern Europe. Microfinancing banks have been created in Albania, Bosnia and Herzegovina and Kosovo. In 2000, these institutions granted 3,700 loans amounting to $22 million. The EBRD recently provided a loan of $6 million to the new microfinance bank in Yugoslavia. A similar bank is due to be created soon in Romania.
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