Thanks to a five-year loan of USD 50 million from the EBRD, Belpromstroybank, a major local bank boasting Belarus’s third largest branch network is set to boost its lending to grass-roots entrepreneurs in order to encourage the development of private enterprise in a country where the public sector accounts for 70 percent of GDP .
Belpromstroybank, controlled by Russia’s state savings bank Sberbank, plans to triple the EBRD’s commitment by ear-marking an additional USD 100 million of its own funds for this lending programme which is targeted at micro, small and medium-sized enterprises (MSME’s), particularly in under-banked regions outside the capital, Minsk.
USD 16 million of the EBRD loan will be set aside for lending to micro and small enterprises and the remaining USD 34 million for small and medium-sized enterprises. The size of sub-loans will be up to USD 200,000 for micro borrowers and from USD 200,000 to USD 3 million for small and medium-sized ones.
The maturity of sub-loans will be up to five years and the funding is intended to provide working capital as well as cover capital expenditure. To qualify for the loans, sub-borrowers must be privately-owned and controlled.
Belpromstroybank is now in a strong position to provide the longer-term funding that grass-roots entrepreneurs have so far found it hard to access in Belarus and its extensive branch network means it is well positioned to reach business outside the capital, Nick Tesseyman, the EBRD’s Managing Director for Financial Institutions, said.
Belarus is still characterised by a very low penetration of banking services, highlighting the country’s needs as much its considerable potential if lending reaches such promising sectors as MSMEs, Mr. Tesseyman added at a loan-signing ceremony today on the sidelines of the EBRD Annual General Meeting in the Kazakh capital, Astana.
This five-year senior EBRD loan builds on a relationship which began last December when the Bank extended Belpromstroybank a USD 40 million facility aimed at speeding up and simplifying trade flows by guaranteeing letters of credit issued by this Belarus bank to cover imports and exports.
Belpromstroybank, a systemic institution in which Sberbank bought a controlling stake in December 2009, serves 27,000 corporate clients, a substantial part of which are export-oriented, as well as over 1.4 million individuals.