BTB will be able to lend larger amounts for longer tenors thanks to a risk-sharing facility with the EBRD
The EBRD and Bai Tushum Bank (BTB), one of the largest financial institutions in the Kyrgyz Republic, signed a participation agreement that will enable BTB to offer longer terms and larger loans to its clients.
The agreement means that BTB is joining the ranks of EBRD partner banks which benefit from a special co-financing mechanism through which the EBRD provides half of the financing and takes on half of the risk. The mechanism, known as a risk-sharing facility, makes lending to medium-sized businesses and large firms more affordable.
Bai Tushum was originally created as a microfinance institution (MFI) and in 2012 became the first MFI in Central Asia to successfully become a bank.
Bai Tushum previously focused on micro and small loans in rural areas, but since becoming a bank it has also been developing its customer base in the medium-sized enterprise segment. BTB will use the new EBRD facility for on-lending to larger enterprises. It will also benefit from this partnership by improving staff skills in corporate credit analysis and risk management.
Signing the participation agreement during the EBRD Annual Meeting in Tbilisi, Nick Tesseyman, EBRD Managing Director for Financial Institutions, said: “We are delighted to support Bai Tushum Bank in its transformational development as a universal commercial bank. We have worked with Bai Tushum on SME lending, energy efficiency programmes and trade finance, and now we are opening a new page in our cooperation by including Bai Tushum in the risk-sharing facility.”
Gulnara Shamshieva, General Manager of Bai Tushum Bank, who signed the agreement on behalf of BTB, said: “We have worked closely with the EBRD since Bai Tushum was a microfinance institution. Bai Tushum Bank highly appreciates this partnership. The financing and technical assistance provided by the EBRD have been key for our growth and institutional development. Our new cooperation under the risk-sharing facility will enable BTB to develop its portfolio of medium-sized firms. The EBRD support will also expand economic possibilities for entrepreneurs.”
Improving access to finance for private sector companies is outlined in the new EBRD country strategy for the Kyrgyz Republic, approved in 2015.