Equity Investment in Zagrebacka Banka, Mostar

Location:

Bosnia and Herzegovina

Project number:

3873

Business sector:

Financial institutions

Notice type:

Private

Environmental category:

FI

Target board date:

03 Dec 1996

Status:

Completed

PSD disclosed:

04 Nov 1996

Project Description

A DM 2 million equity investment in Hrvatska Banka, Mostar, for on-lending to local enterprises.

Project objectives:

1) To assist Hrvatska Banka in strengthening its capital base, 2) to provide guidance and institution building through a seat on the Non-Executive Board and a comprehensive technical assistance package; and 3) to help the bank to attract other shareholders and additional funding sources.

Transition Impact

The institutional strengthening and guidance for a young but well-managed bank will support the emergence of a private sector in Bosnia and Herzegovina and contribute to the lengthening of maturities in credit markets. In addition, it will set and demonstrate high standards of banking to the country's incipient market-based financial sector.

The Client

Hrvatska Banka commenced operations in 1993 and was the first new bank to be set up in the Croatian part of the Federation of Bosnia and Herzegovina. Its main founders were Croatian banks which formerly operated in the region. As of June 1996, the bank had a net worth totalling DM 10.6 million and total assets of DM 100 million.

EBRD Finance

A DM 2 million ( ECU 1.1 million equivalent) equity investment in the form of convertible preference shares which will represent approximately 17 per cent shareholding of the enlarged capital of Hrvatska Banka.

Project Cost

DM 2 million ( ECU 1.1 million equivalent).

Environmental Impact

This project has no direct impact on the environment and has been classified C/0 (it does not require an environmental analysis or an environmental audit). Hrvatska Banka will carry out its operations in accordance with the EBRD's "Environmental Procedures for Local Banks". In implementing these procedures, the bank will require its borrowers to comply with national /local health and safety, environmental and public consultation requirements. The bank will submit annual environmental reports to the EBRD.

Technical Cooperation

Technical Cooperation will be provided to the bank through its proposed twinning partnership with a foreign bank. Funding is being sought.

 

Business opportunities

For business opportunities or procurement, contact the client company.

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