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€12.4 million for micro and small businesses in Romania
Entrepreneurs in Romania will have access to more finance following a €12.4
million loan to ProCredit Bank Romania S.A., the first microfinance bank in
Romania. The syndicated loan is extended by the EBRD and TaiwanICDF
(International Cooperation and Development Fund, Taiwan), and from commercial
lenders Cordiant-International Finance Participation Trust (2004) and Erste
Bank der oesterreichischen Sparkassen AG. Through its 14 branches in
Bucharest, Brasov, Constanta, Cluj, Craiova, and Timisoara, ProCredit Bank
will use the loan to on-lend to local entrepreneurs across the country wishing
to expand their businesses.
ProCredit Bank Romania, formerly known as MIRO Bank, was established in 2002
and changed its name two years later to better convey its integration into the
worldwide ProCredit Bank network. It is owned by the EBRD, Commerzbank AG,
Deutsche Investitions-und-Entwicklungsgesellschaft, the International Finance
Corporation, Internationale Projekt Consult GmbH and ProCredit Holding AG.
ProCredit Bank Romania received technical assistance funds from the US
Government via the US/EBRD SME Financing Facility for institution building and
training loan officers.
Hubert Pandza, EBRD Business Group Director, said micro and small businesses
are critical for economic development in Romania and have proven to be dynamic
and reliable partners for the Bank. Moreover, the participation of commercial
partners like Cordiant and Erste Bank in the loan proves that ProCredit
Romania has been successful in diversifying its refinancing sources as well as
in reducing its reliance on funding from international financial institutions.
Michael Kowalski, General Manager of ProCredit Bank, said that the credit line
should trigger further growth in ProCredit Bank’s loan portfolio, as well as
increase access to finance for many more micro and small entrepreneurs in
Romania.
ProCredit Bank Romania provides micro loans for up to €10,000 (or the
equivalent in Romanian lei or US dollars) with a maturity of up to 24 months.
Small loans of up to €250,000 (or the equivalent in lei or USD) are made with
a maturity of up to 60 months. All loans are provided on a commercial basis.
Since the beginning of 2005 alone, ProCredit Bank has disbursed more than
5,000 business loans for over €25 million, and the average outstanding loan
amount is below €5,000.
ProCredit Bank Romania is also becoming a leader in agricultural lending in
the region. It disburses farmer’s loans (up to €10,000 with a maximum
three-year maturity) for the acquisition of seeds, fertilizers and animals, as
well as rural loans (up to €50,000 with a maximum five-year maturity) for
purchasing agricultural equipment, machinery and land.
So far, almost 20 per cent of disbursed loans in 2005 have been granted to
entrepreneurs operating in the agricultural sector. There are roughly 10
million Romanians living in rural areas, and the majority depend on farming
for a living. Entrepreneurs in this sector are lacking access to capital and
reliable banking services. ProCredit Bank plans to expand its branch network
and train staff to accomplish its foray into this untapped market segment. The
credit line provided to ProCredit Bank will foster its role in agricultural
lending and hence diversify the products available to micro and small
businesses in the Romanian financial sector.
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