EBRD supports small businesses in Croatia with €50 million bank loan

By Anthony Williams
@ebrdtony

The EBRD’s Board of Directors has approved a €50 million credit to Zagrebacka banka dd (ZABA) in Croatia in order to support the Croatian economy in response to the global economic crisis.
 
The loan is part of the EBRD’s response to the global financial crisis, providing a flow of finance to the real economy in Croatia at a time of scarce alternative commercial funding.
 
Subject to the conclusion of legal documentation, the loan to ZABA, a subsidiary of the Italian banking group UniCredit, would be one of the first of several loans planned by the EBRD to systemically important Croatian banks to help them continue financing private sector clients during the crisis.
 
The EBRD is also in discussions with production companies in Croatia to assist them with working capital and balance sheet restructuring to better manage their finances in this challenging period.
 
“This investment acknowledges the increasingly important role the SME sector in Croatia is playing in the overall development of the country. It is crucial to carry on funding small businesses during the crisis period,” said Charlotte Ruhe, the EBRD’s Director for Croatia.
 
"The loan provided by the EBRD will be used for the development of small businesses, a segment in which Zagrebacka banka is the Croatian leader. Thus, even in the times of crisis, we are increasing our focus on support to this very important segment of economy. Funds from this credit line will be used to support our clients’ development projects which are economically viable, and raise the quality and volume of their operations, especially in tourism, agriculture and services that further the quality of life in general.", said Franjo Lukovic, CEO of Zagrebacka banka.
 
The five-year credit is part of a joint initiative with the UniCredit group to continue investing in eastern Europe and so keep funding open to the real economy.
The EBRD is making investments worth a total of €432.4 million in UniCredit subsidiaries across eight eastern European countries, as part of a joint effort to tackle the impact of the global economic crisis on the region. The aim is to provide medium and long-term debt and equtiy financing through UniCredit subsidiaries in support of SMEs, lease finance and energy efficiency projects.
 
UniCredit is the largest banking group in the central and eastern European region, with over 4,000 branches in 19 countries. The group has invested around €10 billion of equity in central and eastern Europe and has around €85 billion of total customers loans in the region. Beside its own funding programs to its subsidiaries, it cooperates with international institutions including the EBRD in order to ensure continuing support to the local economies during these challenging times.

The EBRD investment is part of the joint pledge by the EBRD, the World Bank Group and the European Investment Bank (EIB) to provide over €24 billion in support of the banking sectors in the region and to fund lending to businesses hit by the global crisis.
The International Financial Institutions (IFIs) are working with key banking groups active in eastern Europe to deliver a rapid response to the financing requirements of individual subsidiaries and complementing the funding plans of the parents. This project with UniCredit is expected to be followed by similar investments in the eastern subsidiaries of other banking groups.
 
In response to the crisis, the EBRD has increased its planned investments in the financial sector by 50 percent to €3 billion this year. It has also announced a doubling of its funding to support important cross border commerce via its Trade Facilitation Programme.

In the first quarter of this year, the EBRD had made investments of €1.1 billion, a rise of 64 percent from the same period in 2008. Total investments of €7 billion are expected this year, up over 30 percent from 2008.
 
The individual components of the €432.4 million investment facility are the following:
 
UniCredit (UC) Bank Hungary
SME lending
€50 million
Bulbank ( Bulgaria )
SME lending
€50 million
Zagrebacka Banka ( Croatia )
SME lending
€50 million
UC Bank Serbia
SME lending
€30 million
UC Bank Bosnia
SME lending
€30 million
UC Leasing Serbia
Leasing
€15 million
UC Leasing Bosnia
Leasing
€15 million
UC Leasing Ukraine
Leasing
$25 million
ATF (Kazakhstan)
SME lending
$70 million
ATF ( Kazakhstan )
Energy Efficiency
$30 million
Ukrsotsbank (Ukraine)
Tier 2 capital
$100 million
ATFBank-Kyrgyzstan
SME lending
$20 million
 
About UniCredit:
 
UniCredit is a major international financial institution with strong roots in 22 European countries as well as representative offices in 27 other markets, with over 10,200 branches, approximately 174,000 employees at 31 December 2008. In the CEE region UniCredit operates the largest international banking network with over 4,000 branches and outlets in 19 countries. For further information, visit: www.unicreditgroup.eu