The EBRD is increasing the availability of local currency financing to private businesses in Moldova with a US$ 5 million equivalent synthetic loan in Moldovan lei to ProCredit Bank for on-lending to micro, small and medium-sized enterprises (MSMEs).
ProCredit Bank is the successor of the financial company ProCredit in Moldova, one of the leading institutions in the country providing loans to small businesses. It has a wide geographical coverage with a network of 23 representative offices throughout the country.
The access to long-term financing remains limited in Moldova, hindered by short maturities of customer deposits. The EBRD’s transaction will help ProCredit Bank diversify its funding base and expand its MSME loan portfolio to meet the growing demand for long-term financing from small businesses, particularly in local currency.
Under the synthetic loan structure, the EBRD is providing the financing in US dollars, while ProCredit Bank’s loan obligation is the leu value of the provided funds.
The project will provide essential funding support to the MSME sector while mitigating the foreign exchange risk for the bank and businesses and strengthening the country’s banking sector.
“The EBRD is committed to supporting development of the private sector in Moldova. In line with this priority, the facility will boost an access to longer term funding for small enterprises throughout Moldova, in both rural and urban areas, ensuring better control of foreign exchange and credit risks, both for ProCredit Bank and its customers,” said Nick Tesseyman, EBRD Managing Director for Financial Institutions.
Asmus Rotne, Chairman of the Management Board of ProCredit Bank said: “We are pleased to receive this loan from the European Bank for Reconstruction and Development. ProCredit Bank’s strategic mission in Moldova is to support local entrepreneurs and, ultimately, the overall development of the Moldovan economy. As we strive to meet our customers’ needs in the best way and offer them excellent services, the EBRD’s synthetic loan will help us to provide long-term financing in local currency to the small business sector in Moldova. Clients will get several benefits which will boost their business development – they will be able to have convenient long-term repayments schedule and will not be exposed to exchange rate risk.”
Established under the US$ 25 million Moldova Microlending Framework, the project is the EBRD’s second MSME loan extended to ProCredit Bank in Moldova. In December 2009, ProCredit Bank received a US$ 10 million financing from the EBRD and EFSE, a microfinance investment fund operating in south-eastern Europe, for on-lending to micro and small enterprises.
Since the beginning of its operations in Moldova, the EBRD has committed over €460 million in various sectors of the economy, mobilising additional investment in excess of €320 million.
ProCredit Bank is a member of the ProCredit group of banks operating in 21 countries in Eastern Europe, Latin America and Africa. It is an international bank which is wholly foreign-owned; its shareholders are ProCredit Holding AG, Germany (84.1652%), KfW, Germany (9.5628%) and DOEN Foundation, the Netherlands (6.2719%).