Proposed second credit line of US$ 4 million to Victoriabank SA (VB) to support medium-term lending to local private small and medium-sized enterprises in Moldova. The new facility aims to ensure the continuity of the existing SME credit line under implementation since 1995, which has largely been repaid by VB. It will focus on meeting the demand for medium to long-term financing to SMEs.
The main transition impact of the project would be to enhance the capability of one of the largest private banks in Moldova. This would further increase its activities in providing medium-term financing to domestic SMEs. This would help VB to meet the increased demand for medium-term lending as the country is recovering from the consequences of the Russian crisis of 1998.
VB was the first privately established bank in Moldova, and over the past 11 years has developed into the second largest bank in the country. It currently holds around a 13 per cent share of total assets in the Moldovan banking sector. Its bank lending share in the domestic market is around 12.1 per cent and the total deposits share is 20 per cent.
VB’s growth has been supported by the EBRD since 1995 though the first SME credit line of US$ 4 million, an equity participation of around US$ 0.7 million, Swiss-American Micro-Enterprise Programme funding of US$ 1 million and Trade Facilitation Programme finance of up to US$ 2.5 million. The first credit line has financed 88 sub-projects to Moldovan private entrepreneurs.
Senior loan of US$ 4 million extended for a period of 5 years.
The total project cost is US$ 8 million (€8.6 million).
VB has already benefited from environmental training and implemented environmental procedures satisfactory to the EBRD. All activities will be required to comply with the Bank's Financial Intermediary Environmental Exclusion List. All borrowers will be required to comply, at a minimum, with health, safety and environmental standards and regulations and public information/participation requirements in Moldova. On an annual basis, VB will report to the EBRD on environmental issues.
VB has already benefited from extensive technical cooperation (TC) financed by the Bank from 1995 to 1999. No additional TC funds are envisaged in support of this project.
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