EBRD lends Russia’s SKB-Bank up to $10 million to fund small businesses in the Urals

By Richard Wallis

The European Bank for Reconstruction and Development has agreed to lend SKB-Bank up to $10 million. The EBRD’s funds are earmarked for on-lending to small and medium-sized businesses in the Urals, Russia’s industrial heartland.
This four-year loan combines support for the grass-root economy with the provision of additional funding for the Russian banking sector as part of the EBRD’s anti-crisis response.

On February 20, the EBRD provided SKB-Bank with a trade finance guarantee of up to $5 million as part of the Bank’s long-standing programme to facilitate East-West exports and imports. Within a few weeks, the first transaction under this framework for SKB-Bank, involving a €680,000 letter of credit, had already been underwritten by the EBRD.

EBRD commitments to SKB-Bank now total nearly $90 million. This includes an equity investment in 2007 which gave the EBRD a 25 percent plus one share stake in this bank.

The Ekaterinburg-registered SKB-bank is one of the leading banks in Russia’s Sverdlovsk region with an extended regional network and a strategic focus on lending to small businesses and the retail sector. It is controlled by Dmitry Pumpyanskiy, beneficial majority owner of leading metal pipes producer, TMK.
The large part of SKB-Bank client base is small businesses which do not have access to longer-term funding. This remains a major obstacle to development of this key economic sector and this is precisely what the EBRD’s loan aims to overcome.

The EBRD’s priority is to channel longer-term funding through the banking system to the real sector of the economy in order to ease pressure on liquidity.

Its goal is also to support the capital of existing banking clients and provide finance for mergers and acquisitions to speed up the banking sector’s consolidation, a long-standing goal of the Bank.