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Finance for consolidation of Russian banking sector
$14 million loan to help Probusinessbank take over medium-sized regional banks
The European Bank for Reconstruction and Development has made a $14 million loan to Russia’s privately owned Probusinessbank in support of the Moscow bank’s strategy to expand into key areas outside the capital through the purchase of middle-sized regional banks.
The six-year, convertible loan will strengthen Probusinessbank’s capital and can be extended for up to a further three years at the EBRD’s discretion. The EBRD has the right to convert the loan into ordinary shares of Probusinessbank.
By helping Probusinessbank increase its market share through the acquisition of regional banks, the EBRD is contributing to the consolidation of the banking sector and thus encouraging the process of banking reform in Russia. Cooperation with regional banks has been at the heart of the EBRD’s strategy in Russia since the 1998 financial crisis.
Probusinessbank, founded in 1993, is an independent financial institution that has traditionally focused on small and medium-sized businesses in Moscow. It is actively seeking to diversify its activities, both geographically and by client segment. The EBRD earlier made available a $10 million credit line to Probusinessbank under its Trade Facilitation Programme.
In 2001, Probusinessbank signed a $5 million convertible loan with the International Finance Corporation, the private-sector arm of the World Bank.
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