EBRD loan to Russia’s Orient Express Bank

By Richard Wallis

The EBRD is advancing three loans totalling 1.5 billion roubles (equivalent to EUR 34 million) to Orient Express Bank (OEB), the foremost lender to micro and small businesses in Siberia and the Russian Far East, two under-banked regions.

OEB is the private bank with the third largest network of bank offices in Russia covering 90 percent of the country’s regions and particularly focusing on smaller towns and second-tier cities.

The three-year funding is designated for on-lending to homeowners, industry and local farmers in order to promote residential and industrial energy efficiency, as well as farming. These sectors in Russia all share a vast potential for improvement.

A total of 450 million roubles (equivalent to EUR 10 million) will be made available to homeowners, as well as housing associations and housing management companies, to modernise buildings under a programme targeting residential energy efficiency.

The bulk of the funds (750 million roubles equivalent to EUR 17 million) is destined for making industrial and commercial premises more energy efficient.

Both these programmes are part of the EBRD’s Russian Sustainable Energy and Carbon Finance Facility (RUSEFF) launched in 2009. Industry accounts for 29 percent of Russia’s energy consumption and the residential sector for another 26 percent.

In addition, OEB will receive 300 million rouble (equivalent to EUR 7 million) earmarked for on-lending to family farms and small plot holders within the framework of Russia’s oldest and most successful small business lending programme, the EBRD’s Russia Small Business Fund (RSBF).

Small businesses in the agricultural sector find it particularly difficult to access finance due to the lack of branches in rural areas and the reluctance of many banks to provide farming loans.

OEB is already the largest partner bank of the RSBF. Originally established in 1991 as Dalvneshtorgbank (DVTB), it was taken over 10 years later by a group of Russian bankers who re-branded it and transformed it into a full-service retail bank targeting on individuals and small business sector.

Although its name reflects the Bank’s strong ties to the Russian Far East, OEB also has a strong presence in the fertile south of Russia, as well as the Altai region on the Mongolian border, which serves as Siberia’s bread-basket.