MICROCAPITAL BRIEF: European Bank for Reconstruction and Development (EBRD) Likely to Loan $150m in Jordan Including to Bank Al Etihad, Cairo Amman Bank for On-lending to Micro-, Small, Medium-Sized Enterprises (MSMEs)

The European Bank for Reconstruction and Development (EBRD), a multilateral institution headquartered in London, is considering setting up a senior unsecured credit facility in the amount of USD 150 million for banks in Jordan for on-lending to micro-, small and medium-sized enterprises (MSMEs). If approved, loans under the credit facility framework will be disbursed in USD, EUR or in JOD although MSMEs are expected to receive funds in local currency. It is anticipated that at least five banks will be selected to participate.

The planned credit facility framework will also offer an optional loan guarantee scheme. If approved, the scheme will include a “first loss tranche” provided by EBRD and a “second loss tranche” provided by the Jordan Local Guarantee Corporation, a credit-guarantee agency established as a public-private partnership. Additionally, EBRD plans to offer partner banks technical assistance relating to building capacity in MSME lending.

EBRD is considering partnering with Bank Al Etihad (BAE) and Cairo Amman Bank (CAB) to benefit from the credit facility framework. Subject to the approval of EBRD’s board, EBRD will disburse a local currency loan equivalent to USD 20 million to each of the banks. Both loans will have a term of five years, a grace period of two years and will consist of two local-currency tranches equivalent to USD 10 million. Additionally, both BAE and CAB will benefit from the loan-guarantee scheme as well as from technical assistance provided by EBRD.

BAE reported total assets of JOD 1.9 billion (USD 2.72 billion) as of December 31, 2013. Further financial information on BAE is available on the bank’s website in Arabic. CAB reported total assets of JOD 2.2 billion (USD 3.1 billion), total customer deposits of JOD 1.4 billion (USD 2 billion) and total net credit facilities of JOD 964.7 million (USD 1.4 billion) as of December 31, 2013. Also as of 2013, CAB reported return on average assets of 1.93 percent and return on average equity of 16.14 percent. CAB owns a network of 108 branches in Jordan and Palestine.

EBRD provides loans, debt securities, equity investments, guarantees and technical assistance to micro- and small businesses via commercial banks and non-bank microfinance institutions (MFIs) in Eastern Europe, Central Asia and North Africa. In 2013, EBRD invested EUR 8.5 billion (USD 11.4 billion) in 392 projects across 34 countries.

By Alíz Crowley, Research Associate

About Bank Al Etihad (BAE)

Bank Al Etihad (BAE) (previously known as Union Bank) is a Jordanian financial services institution that was established in 1978. BAE is headquartered in Amman and operates a network of 34 branches in Jordan. BAE also owns a subsidiary, Etihad Brokerage, which was established in 2006. BAE reported total assets of JOD 1.9 billion (USD 2.72 billion) as of December 31, 2013. Further financial information on BAE is available on the bank’s website in Arabic.

About Cairo Amman Bank (CAB)

Cairo Amman Bank is a Jordanian financial services company headquartered in Amman. CAB was established in 1960 by Egyptian Banque du Caire, which converted its branch in Amman to a separate bank and retained a minority ownership up until 1999. CAB has a network of approximately 87 branches and 200 automated teller machines (ATMs) in Jordan. CAB also operates in the Palestinian territories, where it has 21 branches. CAB reported total assets of JOD 2.2 billion (USD 3.1 billion), total customer deposits of JOD 1.4 billion (USD 2 billion) and total net credit facilities of JOD 964.7 million (USD 1.4 billion) as of December 31, 2013. Also as of 2013, CAB reported return on average assets of 1.93 percent and return on average equity of 16.14 percent.

About European Bank for Reconstruction and Development (EBRD)

The European Bank for Reconstruction and Development (EBRD) is a multilateral institution headquartered in London, England. The bank began operations in 1991 upon the agreement of 40 countries, and it is owned by 64 countries as well as the European Investment Bank and the European Union as of 2014. It aims to finance operations that are both commercially viable and assist development in Eastern Europe, Central Asia and North Africa. It does this by providing loans, debt securities, equity investments, guarantees and technical assistance to micro- and small businesses via commercial banks and non-bank microfinance institutions (MFIs). In 2013, EBRD invested EUR 8.5 billion (USD 11.4 billion) in 392 projects across 34 countries.

Sources and Additional Resources

[1] EBRD, Jordan MSME Framework

[2] EBRD, Jordan MSME Framework – Bank Al Etihad

[3] EBRD, Jordan MSME Framework – Cairo Amman Bank

[4] Bank Al Etihad, Annual Reports

[5] Cairo Amman Bank, 2013 Annual Report

MicroCapital, March 14, 2014, European Bank For Reconstruction and Development (EBRD) Brings “Small Business Support” Facility to Jordan, Delivering Technical Assistance to Small, Medium-Sized Firms

MicroCapital, February 3, 2014, Triodos Investment Management Loans $1m each to Advans Banque Congo, Microfinance Institution (MFI) Vitas Jordan

MicroCapital, January 16, 2014, European Bank for Reconstruction and Development (EBRD) to Loan $2m to FINCA Jordan for On-Lending to Micro-, Small Enterprises (MSEs)

MicroCapital Universe Profile: Bank Al Etihad (BAE)

MicroCapital Universe Profile: Cairo Amman Bank (CAB)

MicroCapital Universe Profile: European Bank for Reconstruction and Development (EBRD)

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