Azerbaijani bank signs loan agreement with EFSE for the first time

Business Materials 9 June 2010 20:21 (UTC +04:00)

Azerbaijan, Baku, June 8 / Trend I.Khalilova /

Azerbaijan's Bank Respublika signed loan agreement worth $5 million  with the European Fund for Southeast Europe (EFSE), Bank's Board member Agshin Amirov said today.

The signing ceremony was held in Ohrid (Macedonia) during the annual meeting of EFSE, where Bank Board Chairman Respublika Khadija Hasanova participated in.

The bank will use the proceeds of the EFSE loans to expand financing of investments and working capital of local micro and small enterprises (MSE).

(EFSE) announced loan agreements with six Southeast European financial institutions, including Azerbaijan's Bank Respublika, Belarus' Belgazprombank and Belarusian Bank for Small Business, Serbia's Komercijalna Banka and Montenegro's NLB Montenegrobanka.

The bank allocated 5.4 million euro to Belarusian Bank for Small Business.

EFSE also agreed to extend Belgazprombank a loan of USD 30 million for on-lending to MSEs as well as to private households in the form of loans for house improvement, renovation, enlargement and purchase.

The loans to Bank Respublika, Belarusian Bank for Small Business and Belgazprombank are the first loans being provided under the European Small Business Growth Facility (ENBF), a dedicated European Neighbourhood window within the EFSE structure.

Furthermore, Komercijalna Banka is receiving a loan of EUR 20 million. The loan to Komercijalna Banka is the second EFSE has provided to the Bank for the purpose of refinancing loans to small businesses, following a similar EUR 20 million loan in May 2009. In addition, EFSE is providing another loan of EUR 5 million to NLB Montenegrobanka for small business lending. The current loan is the fourth loan the Bank has received from the Fund.

As a result of the financial and economic crisis, the availability of particularly medium and long-term credit to businesses in the region has considerably declined, primarily impacting MSEs, the bank reported.

"Small businesses in Southeast Europe, including the European Eastern Neighbourhood region, are faced with many challenges in getting access to long-term financing at reasonable interest rates. These investments will facilitate small businesses access to finance, which is an important factor to bring the economies back on a growth track in the aftermath of the financial crisis", said Dr. Klaus Glaubitt, Chairman of the Board of Directors of EFSE.

Overall, since its inception in December 2005 until December 2009, EFSE has offered a total of EUR 684 million in financing to commercial banks, small-business banks and microfinance institutions throughout Southeast Europe. These partner lending institutions have on-lent EUR 1.1 billion of EFSE funds in the form of roughly 216,000 business and housing loans.

It is vital for the economies to ensure small businesses have access to credit lines. EFSE will do just that with the EUR 900 million of financing we plan to provide to financial institutions in Southeast Europe over the next five years to boost small business in the region. This will allow EFSE to facilitate EUR 2.3 billion in 350,000 new loans", Dr. Glaubitt continued.

The microfinance fund European Fund for Southeast Europe (EFSE) is aimed at fostering economic development and prosperity in Southeast Europe. It offers long-term funding instruments to local financial institutions for on-lending loans to small business, in particular to micro and small enterprises (MSEs), as well as housing loans to low-income private households.

Bank Respublika started operating in 1992. Among its shareholders are two large German financial institutions DEG and SIDT with a Bank Respublika share package of 25 percent + 1 share. The bank has 34 branbches and units in Baku and the regions.