The EBRD is one of the few instruments the international community has to promote growth without placing an additional burden on strained government budgets at a time when the region in which the Bank currently operates faces a sharp slow-down, EBRD President Thomas Mirow said as the institution began its Annual Meeting in London.
Addressing the governors representing the 63 governments and two inter-governmental institutions which own the Bank, President Mirow said any recovery would have to be led by private investments in view of the constraints facing national budgets in the EBRD region, even though confidence was at present poor and finance scarce.
In a speech opening the first session of the EBRD Board of Governors, the President stressed that in such economically distressing and uncertain times, the Bank had an important role to play as a catalyst for investment, reforms and growth by mobilising private capital for projects in the EBRD's traditional area of operations.
Stressing that the financial and economic crisis in Europe was far from over, Mr Mirow promised that the EBRD would continue to invest judiciously in order to enhance growth and support reform. This is particularly important at a moment when the commercial banks, which play a key funding role in many EBRD countries, are deleveraging in order to meet new capital and liquidity requirements.
The EBRD was playing a central role in re-launching the so-called Vienna Initiative with the aim of minimising the destructive impact of such deleveraging and to coordinate the responses of these banks' home and host authorities, President Mirow said.
In addition to its current mandate, the EBRD is poised to start investing in the southern and eastern Mediterranean (SEMED) region later this year. At their London meeting, the governors will be asked to approve the creation of a special fund worth €1 billion to kick-start funding for this region ahead of full ratification of the Bank's geographical expansion to this new area of operations.
Mirow said he was honoured by the mandate the Bank's shareholders had given it to help countries in the SEMED region, adding the EBRD presence which had now been established on the ground there would allow full operations to start as swiftly as possible once all the institutional requirements had been met.
He said he was confident that the Bank could contribute to bringing about economic transition in this new region, but also acknowledged that the Bank had a lot to learn and would need to adapt.
The EBRD president concluded by stressing he placed foremost importance on preserving the Bank's financial strength in what he called a difficult environment, without having recourse to further shareholder capital.
The EBRD's core Tier 1 capital had grown by 65 per cent since 2005 to €12.8 billion and the Bank enjoyed a high level of liquidity with non-performing loans accounting for less than 3 per cent of its total loan portfolio, President Mirow said, recalling that all three major credit rating agencies had recently confirmed the Bank's AAA rating with a stable outlook.
He said he saw opportunities to mobilise financial resources for the countries in which the EBRD is active without putting additional strain on the Bank's own capital and that it would look at ways of attracting long-term investors, such as pension funds and sovereign wealth funds, which are currently scarcely seen in the region.