Funding aims to boost small business access to local bank lending
The EBRD has signed off on an unsecured three-year loan of 540 million roubles (equivalent to $18 million) to NBD Bank, a long-standing partner in Russia, to help tackle one of the most negative legacies of the financial crisis, the difficulties faced by the country’s micro and small businesses in accessing bank credit.
The targeted loan is part of the EBRD’s anti-crisis response. It is being made in local currency to suit clients in this vital sector of the Russian economy who rely on rouble revenue streams and have difficulties to borrow in foreign currency due to their inability to hedge the resulting exchange rate risks.
Crucially, the three-year maturity will allow NBD-Bank to extend loans with far longer maturities than micro and small businesses can at present count on in the Russian market.
The loan is being made within the framework of the EBRD’s Russia Small Business Fund (RSBF), launched at the initiative of the G-7 in 1993. NBD-Bank was one of the first to join the programme in which a total of 18 Russian banks are now participating.
The EBRD’s current portfolio of outstanding Russian bank loans specifically earmarked for on-lending to micro and small businesses amounts to around $440 million.
NBD-Bank, in which the EBRD holds a blocking minority stake, is a major provider of micro and small business loans in one of the Russia’s main industrial heartlands. It is particularly active in the Nizhny-Novgorod region some 400 kms east of Moscow where it is the second biggest locally-based bank by assets.