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EBRD, Banca Romaneasca supports micro and small businesses in Romania
$5 million loan to support growth of crucial sector
Entrepreneurs in Romania will have access to more finance following a $5 million loan from the European Bank for Reconstruction and Development to Banca Romaneasca. Through its branch networks nationwide, the bank will use the loan to on-lend finance to local citizens across the country wishing to start up or expand their businesses.
The loan is being provided under the US/EBRD SME Financing Facility, a $150 million fund consisting of $50 million from the US Government and $100 million from the EBRD to support the growth of micro and small enterprises (MSEs) in such countries as Albania, Bosnia & Herzegovina, Bulgaria, Georgia, Kazakhstan, the Kyrgyz Republic, FYR Macedonia, Romania, Serbia & Montenegro, including the province of Kosovo, and Ukraine. A portion of the finance is also used to provide technical cooperation for institution building and training loan officers.
The EBRD will work in close coordination with Kreditanstalt für Wiederaufbau (KfW), the German bank, and the German-Romanian Fund (GRF), KfW's MSE lending programme through the Ministry of Public Finance, in implementing a suitable and efficient lending programme based on previous experience. Loans will be disbursed to borrowers via Banca Romaneasca, and will be analysed by GRF loan officers.
Elizabeth Wallace, the EBRD's Director for Small Business, said micro and small businesses are critical for economic development in Romania and have proven to be dynamic and reliable partners in the Bank's existing programmes in southeast Europe. As well as supporting local entrepreneurs, the EBRD's cooperation with Banca Romaneasca should help to further demonstrate to the Romanian banking sector the viability of financing micro and small businesses, she added.
Petru Rares, Chairman of Banca Romaneasca, underlined the commitment of the bank towards MSEs in Romania, by providing access to financing under a tailored lending program for this niche market. The EBRD loan will increase Banca Romaneasca's funding for the MSE lending program started in 2001, under the German-Romanian Fund, added Mr Rares.
Under the Facility, micro loans will be available up to $10,000 (or the equivalent in lei or euro), with a two to 24-month maturity. Small loans of up to $50,000 (or the equivalent in lei or euro) will be made available with a maturity from two to 36 months. All loans will be provided on a commercial basis.
Dr Klaus Glaubitt, Head of the Financial Sector Division at KfW, said the EBRD, Banca Romaneasca, GRF and KfW are working together to support a sector that is crucial for Romania's economy. Mr Glaubitt added that KfW is pleased that the GRF credit methodology, which has been applied in Romania for four years, is supported by institutions such as the EBRD. Banca Romaneasca was one of the first Romanian banks to cooperate with the GRF and use this methodology.
To date the Facility has leveraged more than 95,000 loans worth $553 million across Albania, Bosnia & Herzegovina, Bulgaria, Kosovo, Romania and Serbia, as well as in Georgia, Kazakhstan, the Kyrgyz Republic and Ukraine. As of 30 April 2003, the EBRD, through its MSE programmes, disbursed more than $2.2 billion in over 300,000 loans in 16 countries.
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