Jordan MSME Framework - Bank Al Etihad

Location:

Jordan

Project number:

46057

Business sector:

Financial institutions

Notice type:

Private

Environmental category:

FI

Target board date:

17 Sep 2014

Status:

Repaying

PSD disclosed:

14 Aug 2014

Translated version of this PSD: Arabic

Project Description

The EBRD is considering a senior unsecured loan of US$20 million equivalent to be disbursed in JOD (approx. JOD 14 million) to support lending to local MSMEs. The Facility is expected to have two tranches of US$10 million equivalent each. Bank Al Etihad will be eligible to benefit from the loan guarantee scheme comprised of (i) a first loss cover provided by the EBRD and (ii) a second loss cover provided by the Jordan Loan Guarantee Corporation (JLGC), provided it meets the necessary portfolio criteria. Furthermore, BAE will be eligible to benefit from tailor made technical assistance.

Transition Impact

Sources of Transition Impact:

- Market Expansion: Jordanian MSMEs account for 95 per cent of active businesses in Jordan, providing 70 per cent of private sector total employment and generating around 40 per cent of GDP. Yet, access to finance remains an important impediment to MSMEs’ growth, with bank lending to MSMEs estimated at around 11 per cent of total lending.

- Skills Transfer: Dedicated technical assistance will support Jordanian banks in building capacity in MSME lending and developing appropriate products.

The Client

Bank Al Etihad (“BAE”), the seventh largest commercial bank in Jordan with total assets of US$2.8bn, lending market share of 5.7 per cent and deposit market share of 4.4 per cent as of 2013. BAE was established in 1978 and listed on the Amman Stock Exchange. BAE serves to corporate, SME, and retail clients through its 35 branches cross Jordan.

EBRD Finance

Senior unsecured term facility of 5 years with 2 year grace period.

Project Cost

Up to US$20 million equivalent in JOD.

Environmental Impact

Categorised FI. BAE will be required to comply with the EBRD’s Performance Requirements (PR) for FIs (specifically, PR2 Labour and Working Conditions and nine Financial Intermediaries) and adhere to the EBRD’s Environmental and Social Exclusion and Referral Lists and submit Annual Environmental and Social Reports to the EBRD.

Technical Cooperation

None.

Company Contact

Wasim Salfiti,

Head, SME Business Development

w.salfiti@bankaletihad.com

 

Business opportunities

For business opportunities or procurement, contact the client company.

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