The EBRD is helping to plug the gap in longer-term funding for small and medium enterprises (SMEs) in Montenegro by extending a €10 million credit line to the local subsidiary of French banking group Société Générale.
SMEs make up the vast majority of the private sector in Montenegro. In order to grow and support the country’s economic recovery, these companies need loans at long or medium-term tenors. However, due to the global downturn and the uncertainty caused by the eurozone crisis, such funding sources are scarce on the local market.
The EBRD is lending up to €10 million to Societe Generale Banka Montenegro (SGME) for on-lending to SMEs. Under the credit line, the average loan size will be €250,000 and the average tenor will be no shorter than three years.
In addition, for this credit line the EBRD has asked SGME to increase the proportion of loans it makes to small and medium businesses outside the capital Podgorica. This is to help SMEs in less urban areas develop and support the economy in Montenegro’s regions.
Henry Russell, EBRD Financial Institutions Director for the Western Balkans and Croatia, said: “At a time when many lenders in Montenegro are reluctant to lend to SMEs beyond the short term, the EBRD is pleased to work with Societe Generale Banka Montenegro in bridging the funding gap. Small and medium businesses are vital to Montenegro’s recovery and they can only grow if they have the right kind of financing.”
Branka Pavlovic, CEO of Societe Generale Banka Montenegro, said: “We are very pleased to continue our successful cooperation with the EBRD. Since 2010, SGME has positioned itself as the partner bank of choice of SMEs and we have doubled our portfolio in this market over the last two years. We are expecting to continue with this growth, as small and medium enterprises already recognise us as a reliable partner ready to help them maximise their chances of further developing their business.”
The loan to SGME is being extended under the EBRD’s Western Balkans and Croatia Financing Framework, which was set up to provide financial institutions in the region with a full range of financial products, including senior debt facilities and SME financing. The total amount of the Framework is €250 million.
Since the beginning of its operations in Montenegro, the EBRD has invested about €300 million in the country’s economy.
Societe Generale Banka Montenegro, the 4th largest bank in Montenegro by assets, has its head office in Podgorica and a network of 20 regional branches. SGME offers a complete range of banking and financial services to retail, SME and corporate customers.