FIF - Lovcen banka - SME line

Location:

Montenegro

Project number:

52597

Business sector:

Financial institutions

Notice type:

Private

Environmental category:

FI

Approval date:

19 Oct 2021

Status:

Approved

PSD disclosed:

21 Oct 2021

As per section 1.4.2 (iii) of the Directive on Access to Information: "For Projects approved by Bank management where the Board of Directors has delegated the approval authority, the PSD shall be disclosed at the start of the relevant no-objection notification period to a member country of the Bank in accordance with Article 13 (iii) of the Agreement Establishing the EBRD."

Project Description

Provision of a senior unsecured loan to Lovcen Banka ("LB") of EUR 4 million under the Financial Intermediaries Framework ("FIF") for on-lending to small and medium enterprises (SMEs) in Montenegro.

The loan is also an important resource to SMEs in the context of the Covid-19 crisis response and the post-crisis recovery, allowing uninterrupted access to mid-term financing.

Project Objectives

The proposed project will improve access to finance for SMEs, which are the main source of employment in the private sector and a major contributor to the economy in Montenegro. The bank is successfully implementing a SME-focused strategy and well-positioned to provide much needed financing to smaller businesses in the country via its regional branch network. The focus will also be on lending in the regions outside the capital Podgorica and attracting new SME clients.

Transition Impact

ETI score: 60

The project contributes to the objectives of the EBRD Financial Intermediary Framework, supporting the Competitive and Resilient transition qualities.

The project improves the availability of medium-term funding for SMEs, which are the main source of employment in the private sector and a major contributor to the economy.

With its wide regional outreach and SME-focused strategy, LB is well-positioned to provide much-needed financing to smaller businesses and to contribute to the development of SMEs in the country.

The focus will also be on lending in the regions outside the capital, attracting new SME clients and maintaining adequate portfolio quality.

Client Information

LOVCEN BANKA AD

LB is the 7th largest bank in Montenegro with a market share of 5.2% in terms of assets, 6.2% in terms of net loans and 4.8% in terms of deposits. LB operates within the network of 15 branches (three in the capital city of Podgorica and the remaining throught Montenegro), has 144 employees (vs. 128 at end-2019) and 27 ATMs. The bank's loan portfolio is almost equally divided between retail and corporate (49:51). Loans to SMEs represent 83% of the corporate segment.

EBRD Finance Summary

EUR 4,000,000.00

Total Project Cost

EUR 4,000,000.00

Additionality

The EBRD loan will provide much-needed long term financing, which will support the market segment as a whole and enable the continuation of the successful implementation of the bank's SME strategy. EBRD along with other IFIs is one of the rare providers of long term funding and will be additional as one of the few external lenders to LB.

LB will be following and enforcing clearly defined eligibility criteria for sub-borrowers, EBRD environmental and social standards, higher financial covenants and reporting requirements, thus contributing to the competitiveness and resilience of the financial sector as intended under the FIF Framework.

Environmental and Social Summary

The Client will be required to comply with the EBRD's Performance Requirements 2, 4 and 9 and with EBRD's Exclusion List, implement the EBRD's E&S Risk Management Procedures for Micro, SME and Corporate loans, and submit annual environmental and social reports to EBRD.

Technical Cooperation and Grant Financing

None

Company Contact Information

Marijana Scekic
Marijana.scekic@lovcenbanka.me
+382 20 205 410
+382 20 205 411
www.lovcenbanka.me
Dzordza Vasingtona 56/I, 81000, Podgorica Montenegro

PSD last updated

21 Oct 2021

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

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