The EBRD today committed to lend the Russian leasing arm of the leading European banking group UniCredit 1.2 billion roubles (equivalent to EUR 30 million) as part of a strategy to boost a sector which remains a vital source of funding for small and medium-sized businesses but which was particularly hit by the crisis in Russia.
The five-year loan will support the plans of UniCredit Leasing Russia (UCLR) to meet a growing demand for leased equipment and heavy vehicles, a segment which saw a dramatic fall during the 2008-2009 crisis. Demand is now primarily coming from small and medium-sized businesses in need of local currency financing.
UCLR has a nation-wide foot print in Russia and small businesses account for about 70 percent of its new clients. Nearly 60 percent of its new business is done in the regions of Russia, outside Moscow and St. Petersburg. The EBRD’s loan, its first to a UniCredit entity in Russia, will allow UCLR to offer longer-term loans to national companies purchasing local currency-denominated leases on equipment and heavy vehicles in Russia.
“With this new loan, we are given the opportunity to further support small and medium enterprises, the segment that has been mostly impacted by the global financial crisis. Our priority is to remain a reliable partner to our customers, regardless of the difficult financial conditions,” said Fabrizio Rollo, CEO of UCLR.
“Partnership with the EBRD in Russia is one further important step in supporting SMEs in their investment plans for 2012," pointed out the CFO of UCLR, Mr. Christoph Siegl. "The financial advantage of EBRD loan will be available for final customers of UCLR through a wide range of products and services which will be tailored in accordance to the specific needs and requirements of local businesses across Russia."
This is the third EBRD loan to a Russian leasing company since the crisis. Earlier the EBRD also provided loans totalling EUR 115 million to UniCredit Leasing network in EBRD’s countries of operations as part of a broader partnership with what is one of the largest pan-European banking groups.
By the end of 2010, the EBRD had provided funding totalling EUR 430 million in support of UniCredit in the Bank’s countries of operations during the crisis.
Leasing is structurally important for the Russian economy as it provides basic financing to corporate clients in a country where the limited availability of medium to long-term funding, particularly for the small business sector, has always been the main obstacle to capital investment.
Before the crisis, the Russian leasing market grew dramatically at a rate of 50 percent a year to become the world’s seventh largest as measured by the volume of leased portfolios, even though penetration of such products remains far lower than in the EU. However, the market suffered a devastating 60 percent fall after 2008.
Russia’s largest foreign-owned bank, UniCredit Bank Russia, has a 40 percent stake in UCLR with the remainder held by the leasing holding of UniCredit - UniCredit Leasing S.p.A.