Second capital increase of DM 0.8 million in Micro Enterprise Bank to increase the capital of the bank to comply with the new capital requirements and to further expand its activities.
Project objectives: The capital increase is required to comply with the requirements of the new Federation of Bosnia and Herzegovina Banking Law and to allow the bank to further expand its activities. The proposed operation will enable MEB to further consolidate its position as a financial institution focused on providing specialist services to private micro and small enterprises in BiH.
The project aims to:
- assist transition from unemployment and dependency on humanitarian aid to employment and independence;
- support the emergence of a private sector by offering tailored loan facilities for MSEs;
- promote entrepreneurship at grass roots level;
- have a strong demonstration effect;
- stimulate competition, improving efficiency and satisfying directly or indirectly the existing credit demand.
Micro Enterprise Bank (MEB) is a specialist micro and small enterprise finance institution established by the EBRD (28.6%), IFC (28.6%) IMI (International Micro Investitionen AG) (19.0%), FMO (Nederlandse Financierings-Maatschappij voor Ontwikkelingslanded N.V.) (14.3%) and KfW (9.5%) in September 1997. MEB is operating from its Head Office in Sarajevo and 5 branches in Ilidza, Bihac and Tuzla, Mostar and Banja Luka.
DM 0.8 million (€0.4 million) equity investment to participate in the capital increase of DM 3.1 million to boost MEB's share capital to DM 8.8 million.
DM 3.1 million (€1.6 million) capital increase. The total EBRD exposure to MEB after this capital increase will be DM 7.55 million (€3.9 million).
MEB will carry out its operations in accordance with the EBRD's Environmental Procedures for Local Banks. These provide for the integration of environmental due diligence into MEB's credit appraisal processes and a requirement that borrowers comply, at a minimum, with national and local health, safety and environmental regulations and standards and public consultation requirements. MEB will submit annual environmental reports to the EBRD.
Technical cooperation funding consists of:
- EUR 1.5 million from the EC to pay IPC under the Management Agreement;
- DM 400,000 from the Norwegian Government for training of credit officers.
No additional technical co-operation funding will be involved in the proposed operation.
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