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EBRD and Alpha Bank Romania support small local municipalities
RON 72.2 million first local currency lending for EBRD in Romania
Small municipalities across Romania will benefit from more access to finance
following a 72.2 million Romanian Lei, or the equivalent to €20 million, loan
from the EBRD to Alpha Bank Romania (ABR). It is the first time the Bank is
lending in local currency.
The EBRD loan will enable ABR to on-lend long-term loans of up to 15 years to
municipalities with fewer than 150,000 inhabitants in projects that improve,
for example, roads, sewerage, district heating and urban transport. Small
municipalities are currently underserved by the local Romanian banks,
especially with longer-term loans.
Jean-Marc Peterschmitt, EBRD Director for Bank Lending, said municipal lending
is rapidly growing in Romania, but the financial resources available locally
for the sector are very limited. The EBRD, working with innovative banks like
ABR, are helping to fill that gap to make crucial long-term loans available to
small municipalities, said Mr Peterschmitt. Furthermore, this loan should act
as a demonstration effect to other local banks of the benefits of successfully
lending to financially stable small local towns and cities, he added.
The loan is provided under a €175 million EU/EBRD Municipal Finance Facility,
an EBRD and EC initiative to stimulate commercial bank lending to small and
medium-sized municipalities in the EU accession countries. The facility aims
to address the chronic shortage of long-term finance available to small cities
and towns. The European Union, through the Phare Programme, is also providing
technical cooperation funds to help ABR kick-start the project and help, for
example, to promote staff training and establish modern credit procedures. A
portion of the funds will also help municipalities to start projects.
Jonathan Scheele, Head of the Delegation of the European Commission to
Romania, said: “Local municipalities are and will be in need of co-financing
for the pre-accession and future structural funds. As their local budgets are
limited, loan arrangements could be one solution to this issue. The best
example is the SAMTID programme, which helps the rehabilitation of water
supply systems in small towns. The EBRD and European Investment Bank have been
very active in this programme, co-financing 50 per cent of each investment
project.”
Established in 1994, ABR is one of Romania’s largest private banks. With its
headquarters in Bucharest, the bank reaches over 250,000 clients through a
network of 26 units across Romania. Christos Giampanas, Executive President of
Alpha Bank Romania, said this latest loan builds on the long and very good
co-operation between the EBRD and Alpha Bank Group. This latest facility is a
new development, and it is in line with Alpha Bank Romania’s strategy to
promote lending in local currency. Moreover, it demonstrates our willingness
to support regional development in Romania. We are committed to making it a
success, he added.
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