Financial institutions strategy

The financial institutions strategy sets out the general strategic and operational role of the EBRD in this sector and establishes the overall framework for the Bank’s activities.

The Bank’s initial response to the global financial crisis focused primarily on the banking sector.  Initiatives such as the Joint IFI Action Plan and the Vienna Initiative have played a timely role in averting a systemic banking sector and currency collapse in the region.

The financial institutions strategy builds on lessons learnt from the crisis.

Key lessons for the Bank include:

• Rapid credit growth and heavy reliance on foreign borrowing can generate structural vulnerabilities that lead to systemic instability in a crisis.
• The Bank’s approach to financial system development needs to focus on the broader needs of the financial system, such as adjusting to the new, evolving  legislative/regulatory frameworks in the wake of the crisis and improving basic financial infrastructure, while recognising that the Bank’s primary competitive advantage is the delivery of high quality projects.
• Risk management and corporate governance are among the areas that require renewed attention.
• Addressing the needs of the sector in the region will require a cooperative approach, which will have to include the private sector, national authorities and the IFIs.

The twin objectives of the financial institutions strategy are to deal with the legacy of the crisis and support the development of more sustainable financing of the real economy. 

The Bank will pursue five strategic priorities:

• Complete the crisis response activities and stimulate lending to the real economy.
• Help develop local capital markets and both funding and lending in local currency.
• Promote better governance, sustainable business models and improved risk management of banks and non-bank institutions.
• Support consolidation, privatisation and re-privatisation of the banking sector.
• Support development of new regulatory frameworks in close coordination with other IFIs, including in the area of cross-border regulation.

The Bank will continue to be primarily focused on delivering high quality projects that meet the key criteria of sound banking, additionality and transition impact, but we will also take a broader perspective and seek to influence the development of financial markets and contribute to financial stability.

A healthy, efficient and stable financial sector remains the cornerstone of a market economy.    

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