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EBRD and RZB strengthen ties in central and eastern Europe
€73 million for SMEs in Croatia, long-term financing in Moscow and strengthening Yugoslav banking sector
To help meet the increasing investment demands of central and eastern Europe, the European Bank for Reconstruction and Development will invest as much as several hundred million euros in the network of regional banks belonging to Austria's Raiffeisen Zentralbank Oesterreich AG (RZB).
The EBRD will support RZB's regional banks as they provide an increasingly diverse array of finance to local clients, including loans, mortgages, leasing and long-term financing that is otherwise scarce. A portion of the funds will be specifically aimed at small and medium-sized enterprises (SMEs).
The two institutions are working on a strategy that will eventually enable the EBRD to finance projects in
11 countries where RZB has established regional banks, including Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, FR Yugoslavia, Poland, Slovakia, Slovenia, Romania, Russia and Ukraine. Financing from the EBRD will be considered on a country-by-country case, focusing on the direct needs in the country.
As part of this expanding relationship with RZB, the EBRD today agreed to lend €73 million to three regional banks in Croatia, Russia and FR Yugoslavia. In Croatia, a €30 million EBRD loan will help Raiffeisenbank Austria d.d., Zagreb, stimulate the growth of SMEs, as well as provide much-needed medium-term financing to local entrepreneurs across the country. The €33 million EBRD loan to ZAO Raiffeisenbank Austria, Moscow, will help the bank provide its strong local clients access to longer-term financing than is otherwise available in the market. A €10 million EBRD loan to Raiffeisenbank Jugoslavija a.d., Belgrade, the first foreign-owned bank to receive a banking licence in FR Yugoslavia, will strengthen its financial position, enabling it to increase loans to local clients, and will at the same time inject much-needed financing into the country's banking sector. With these three loans, the total amount of EBRD financing to RZB to date will be around €155 million.
At the signing of the loans in Vienna, Noreen Doyle, First Vice President at the EBRD, said RZB is a natural partner for the Bank. With banks spread across the region, employing more than 11,000 local staff, RZB, serves a similar goal to the EBRD in strengthening local economies, Ms Doyle said.
The three loans build on a solid base of experience between the EBRD and RZB. To date the two have worked on eight projects in five countries, and RZB is the third-largest co-financier of projects with the EBRD. RZB has worked extensively in central and eastern Europe, and developed a reputation as a bank with long-term commitments to the region, with some 540 branch outlets from Sarajevo to Kiev.
Furthermore, EBRD and RZB have signed a Memorandum of Understanding regarding the conclusion of funding facilities for RZB network banks in Bucharest, Prague, Sofia and Warsaw. These facilities, at a total of €50 million, are earmarked for SMEs.
Herbert Stepic, Deputy Chairman of RZB, underlined the importance of the cooperation with the EBRD. "On one hand, the SME programme of the EBRD significantly strengthens the backbone of each economy," Mr Stepic said. "On the other hand, the financing of RZB's network banks means a strong extension of our own lending activities. The local economies will benefit from both."
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