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.
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.
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.
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
Total Project Cost
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
Company Contact Information
+382 20 205 410
+382 20 205 411
Dzordza Vasingtona 56/I, 81000, Podgorica Montenegro
PSD last updated
21 Oct 2021
Further information regarding the EBRD’s approach to measuring transition impact is available here.
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Independent Project Accountability Mechanism (IPAM)
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