US$ 8 million loan to ProCredit Bank for local currency lending
The European Bank for Reconstruction and Development (EBRD) is increasing the availability of local currency financing to private businesses in Moldova with a US$ 8 million loan to ProCredit Bank for on-lending to small and medium-sized enterprises, a vibrant sector of the Moldovan economy.
ProCredit Bank is one of the leading providers of loans to small firms in the country.
The EBRD’s loan will help ProCredit Bank to diversify its funding base and meet the growing demand from small businesses for long-term financing, particularly in local currency. To meet these needs, the EBRD is providing its financing under a specially designed synthetic structure with a foreign currency hedge provided by the TCX Fund, which makes ProCredit Bank’s obligation to repay the EBRD financing in local currency. This structure offers essential support to small businesses while mitigating the foreign exchange risk for lender and borrowers alike.
“We continue to support ProCredit Bank and increase the availability of local currency financing to private businesses as access to long-term funds remains very limited in Moldova. The structure of our loan ensures better control of foreign exchange and credit risks for ProCredit Bank and its customers,” said Henry Russell, EBRD Director for Financial Institutions in the Western Balkans, Belarus, Moldova and Ukraine.
The EBRD has previously provided two similar loans to ProCredit Bank for the total amount of US$ 10 million. The funds were on-lent to 3,700 companies.
Eugenia Gashikulina, Deputy Chairperson of ProCredit Bank’s Management Board said: “We are pleased to receive this loan from the EBRD. ProCredit Bank’s mission in Moldova is to support local entrepreneurs and, thereby, the overall development of the Moldovan economy. The EBRD’s loan will help us to provide long-term local currency financing to our clients in the small business sector, who will be able to have convenient long-term repayment schedules and will not be exposed to exchange rate risk.”
The EBRD is the largest institutional investor in Moldova. It focuses on supporting private sector activity, promoting European standards and regional integration and developing efficient and sustainable public utilities. To date, the EBRD has invested some €900 million in over 100 projects in the country.