Project description
and objectives:
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A pre-privatisation subordinated convertible loan of up to DM 20 million to the Lithuanian Agricultural Bank (AB) to support its re-capitalisation before its privatisation, which is anticipated to take place in 1998.
The operation will enable AB to strengthen its capital base, boost its liquidity, have sufficient financing to continue its restructuring process and leverage its resources to increase lending to Lithuanian corporate and retail customers.
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Transition impact:
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The strengthening of AB's capital base is expected to facilitate its privatisation by presenting to interested investors an institution with improved financial strength and a financial investor prepared to participate in the privatisation.
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The client:
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Lietuvos Zemes Ukio Bankas (AB) is a commercial bank owned primarily by the Lithuanian Ministry of Finance (MoF), with 87 per cent. The Ministry is committed to privatise AB in the next 12 months. The AB is the third-largest bank in Lithuania in terms of assets and branch network (only the Savings Bank has a larger branch network). Compared with other Lithuanian banks, AB ranks first in terms of outstanding loans (LTL 975 million) and third in terms of total deposits (LTL 851 million). At the end of 1997, the Bank employed nearly 2,500 staff.
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EBRD finance:
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A subordinated convertible loan of up to DM 20 million extended for a period of seven years, of which the EBRD will provide DM 15 million and DEG the remaining DM 5 million. The subordinated convertible loan will be counted in AB's Tier 2 capital and will include an option to convert into ordinary shares of AB at or after privatisation.
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Total project cost:
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The total project cost is DM 20 million.
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Environmental impact:
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The Bank will adopt and implement environmental procedures satisfactory to the EBRD, and all activities will be required to comply with the Bank's FI Environmental Exclusion List. All borrowers will be required to comply, at a minimum, with health, safety and environmental standards and regulations and public information/participation requirements in Lithuania. On an annual basis, AB will report to the EBRD on environmental issues.
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Technical
cooperation:
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Technical cooperation funding will be provided for training AB's staff in the application of the EBRD's Environmental Guidelines.
For consultant opportunities for projects financed by technical cooperation
funds, visit procurement
of consultants.
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Company contact:
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EBRD contact:
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Ieva Grauzinyte, Operation Leader: grauzini@ebrd.com
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Business opportunities:
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For business opportunities or procurement, contact the client company.
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General enquiries:
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EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168; Fax: +44 20 7338 7380
Email: projectenquiries@ebrd.com
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