Equity investment and five-year cross-currency convertible bank-to-bank loan.
The main objective of the project is to achieve the final privatisation and stabilisation of SBO by buying out the Croatian State Agency for Deposit Insurance and Bank Rehabilitation and granting a long-term financing facility to SBO. As a result, SBO will be legally removed from its rehabilitation status. The Bank will be instrumental in bringing a strategic investor to SBO's ownership, which will contribute to setting up sound corporate governance standards, and will play a key role in the management and business development of SBO.
The ongoing privatisation process in the banking sector is vital to the transition process in Croatia. The project will contribute to this process as it constitutes the first privatisation of a rehabilitated bank. The foreign participation will contribute to setting standards for good corporate governance and business conduct and will have very important demonstration effects for future privatisations. The EBRD investment would also help SBO in achieving a listing on the Zagreb Stock Exchange, thereby promoting the development of the still nascent capital market in Croatia. Furthermore, SBO is the banker of many small and medium-sized private sector enterprises in smaller cities and rural areas where there is urgent need for finance. The provision of medium and long-term funding would significantly improve the business environment in a region badly affected by the war.
Slavonska Banka d.d. Osijek (SBO) is a commercial bank organised as a joint-stock company and incorporated under the laws of Croatia. At the end of 1997, SBO ranked as the seventh-largest bank in Croatia by total assets and is the major bank in the Slavonija region.
Purchase of approximately 17.5 per cent of SBO's share capital and a five-year cross-currency convertible loan.
The project will consist of an EBRD equity investment of EUR 4.4 million and a convertible DM 20 million loan, of which 50 per cent will be financed by the EBRD. In total, the EBRD's aggregate net investment will not exceed the equivalent of EUR 10 million.
SBO will implement the EBRD's "Environmental Procedures for Intermediated Lending through Local Banks", including adherence to the FI Environmental Exclusion List. The requirement to provide evidence of compliance with Croatian health, safety, environmental and public consultation requirements will present SBO's borrowers with a strong incentive for regulatory compliance. SBO will thus support the monitoring and enforcement activities of the regulatory authorities and contribute to the enhancement of the overall environmental performance level of the small and medium-sized enterprise sector in Croatia. SBO will submit annual environmental reports to the Bank.
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