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EBRD $10 million loan facilities for Russia’s Spurt Bank
10-year funding part of EBRD support package for Russian banking system
The European Bank for Reconstruction and Development is providing 10-year subordinated loans of $10 million in aggregate to strengthen the balance sheet of Spurt Bank, a leading bank in Russia’s Tatarstan Republic with a rapidly growing portfolio of loans to small and medium-sized businesses in the region.
The project is part of a broader EBRD anti-crisis support package for Russia’s banking system.
These unsecured loans will count towards Spurt Bank’s Tier II capital under Russian Central Bank regulations. The loans provide for bullet repayment on maturity. The transaction brings the EBRD’s total commitments to Spurt Bank to $48 million. The EBRD has, since 2007, held a 28.25 percent equity stake in Spurt Bank.
By providing equity-type support, the EBRD makes it possible for recipient banks to use their broadened capital base to increase the amount of debt they can raise from other lenders. The resulting leverage would multiply the effect of the EBRD’s anti-crisis funding.
“The project with Spurt Bank is the third transaction aimed at strengthening the capital base of our Russian banking clients since the crisis hit Russia”, said Nick Tesseyman, the EBRD Business Group Director for Financial Institutions. These institutions have shown their ability to weather the first phase of the crisis and this funding aims to help them retain their clients and market share, he added.
The EBRD financing is expected to improve the structure of Spurt Bank’s balance sheet and send an important message to the market by demonstrating the EBRD’s long-term commitment to the bank and confidence in its development strategy, Mr. Tesseyman added.
Spurt Bank’s diversified funding, good corporate governance and the quality of its loan portfolio place it in a position to emerge from the crisis with a strong market potential. Loans to micro, small and medium-sized businesses account for 15 percent of Spurt Bank’s portfolio.
In today´s difficult market situation the role of the EBRD and other International Financial Institutions in demonstrating support to the banking system is vitally important. This is why the EBRD, in addition to its normal lending programme, has put together an anti-crisis package for a sector whose health is crucial for the whole Russian economy.
The roll-out of these projects in support of existing clients will continue over the next few months. The package provides various funding solutions, ranging from equity or quasi equity participations to increasing the amount of Russian trade finance the EBRD is willing to guarantee in order to maintain a rapid and smooth flow of imports and exports.
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