EBRD First Vice President Varel Freeman opens Bank's 5th Russian regional office

By Richard Wallis

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The European Bank for Reconstruction and Development has officially opened an office in the Rostov-on-the-Don, the fifth such regional office in Russia, as part of a long-term strategy which combines pushing deeper into Russia’s regions with getting closer to its local clients, two vital goals in the current crisis. The EBRD’s Rostov office will cover 13 Russian regions in which 16 percent of the country’s population live. This includes the North Caucasus.

Opening the new office, EBRD First Vice President Varel Freeman said the crisis made the Bank’s regional drive more relevant than ever as the EBRD mobilises to provide funding to new and existing Russian clients, especially in the regions of Russia exposed to exceptionally high risk aversion on the part of traditional lenders.

The EBRD, the largest single financial investor in the Russian economy, now has five offices outside Moscow: in St. Petersburg, Ekaterinburg, Vladivostok, Samara and Rostov-on-the-Don. The expected opening of a sixth regional office in the Siberian city of Krasnoyarsk later this year will complete the footprint, giving the EBRD a permanent presence in each of Russia’s seven regional administrative groupings known as Federal Districts.

The EBRD is strongly committed to promoting regional development, including through the renewal of essential infrastructure, as illustrated by the 12-year loan of €120 million extended to OGK-5 last month for the construction of a new energy efficient unit at its Nevinnomysskaya power plant in southern Russia, Mr. Freeman said.

Of the €1.8 billion committed by the EBRD for Russian projects last year, the overwhelming majority of the funding was for projects outside Moscow and St. Petersburg.

The Bank’s cumulative commitments in the Southern Federal District total €500 million and cover a wide range of activities -- from banking to power generation and district heating, as well as several agribusiness projects. The latest, a loan of up to $35 million (equivalent to €25 million) to Center-Invest Bank, was signed by Mr. Freeman today.

This EBRD loan will provide medium-term funding for on-lending to local micro, small and medium-sized businesses, Center-Invest’s core client base and a sector which is bearing the full brunt of the crisis. Supporting small and medium-sized businesses is at the heart of the EBRD’s mandate, especially at a time when these firms do not have privileged access to state funding and face an exceptionally tight credit market, Mr. Freeman said at the signing.

Other companies financed by the EBRD in the Southern Federal District include:Yug-Rusi, Bonduelle Kuban, Veolia Voda, Louis Dreyfus, Krasnodar Glass Packing Plant, Taganrgog Teploenergo and Locko Bank.

Earlier, Mr. Freeman met Rostov region Governor Vladimir Tchub to discuss progress on existing and potential EBRD deals. EBRD officials accompanying him included Bruno Balvanera, head of the EBRD’s Regional Development in Russia, and Dmitry Larionov, head of the EBRD office in the Southern Federal District, as well as Alexander Orlov, the EBRD’s Director for Government Relations in Russia. The ceremony marking today’s office inauguration was attended by local authorities and business community representatives.

The EBRD, together with the Rostov region’s Ministry of Economy, is on March 18 jointly organising a Business Development seminar in Rostov focusing on what the Bank can do in agribusiness, mining, the corporate sector, municipal, environmental and transport infrastructure, as well as energy efficiency. Media representatives are welcome

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