MICROCAPITAL BRIEF: European Bank for Reconstruction and Development (EBRD) Loans $13m to Krygyzstan’s Optima Bank for On-lending to Micro-, Small, Medium-sized Enterprises (MSMEs)

The European Bank for Reconstruction and Development (EBRD), a multilateral investment institution headquarted in London, England, recently announced that it will loan the local-currency equivalent of USD 13 million to Optima Bank, a commercial bank headquartered in Bishkek, Kyrgyzstan.

The credit package will include two transactions: a term loan of USD 11 million that will be on-lent to micro-, small and medium-sized enterprises (MSMEs) and a trade finance line of USD 2 million that will allow Optima Bank to support its corporate borrowers to become involved in international commercial transactions. The fact that the credit facility will be denominated in local currency allocates currency risk to EBRD rather than Optima Bank or its customers. It is anticipated that EBRD will also extend a risk-sharing facility of USD 20 million to Optima Bank at an unspecified date.

As of year-end 2013, Optima Bank reported total assets of KGS 15 billion (approximately USD 212.8 million), a gross loan portfolio of KGS 2.5 billion (approximately USD 35.4 million) and deposits of KGS 2.3 billion (approximately USD 32.6 million). EBRD invested EUR 8.9 billion (approximately USD 10.1 billion) in 377 projects in 34 countries during 2014, and as of December of that year, it reported total members’ equity of EUR 14.2 billion (approximately USD 16.1 billion). In Krygyzstan, EBRD aims to strengthen the export sector by facilitating economic and trade cooperation of the country within the region, facilitate the access to credit of MSMEs and promote the “sustainability of public utilities”[2].

 

By Victor Mugo, Research Associate

 

About Optima Bank

Optima Bank (formerly known as Kyrgyz Commercial Bank for Business, Kyrgyz Commercial Bank for Reconstruction and Development of Energy and ATF Bank – Kyrgyzstan) was founded in 1992 and is headquartered in Bishkek, Krygyzstan. The bank has 13 branches and offers deposit accounts; private banking services; and loans for housing consumption, rural development and small and medium-sized enterprises. As of year-end 2013, the bank reported total assets of KGS 15 billion (approximately USD 212.8 million), a gross loan portfolio of KGS 2.5 billion (approximately USD 35.4 million) and deposits of KGS 2.3 billion (approximately USD 32.6 million).

 

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 is owned by 64 countries as well as the European Investment Bank and the European Union as of 2015. 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). EBRD invested EUR 8.9 billion (approximately USD 10.1 billion) in 377 projects in 34 countries during 2014, and as of December of that year, it reported total members’ equity of EUR 14.2 billion (approximately USD 16.1 billion).

 

Sources and additional resources

[1] EBRD.com: EBRD re-engages with Optima Bank in Kyrgyz Republic to support small business and trade

http://www.ebrd.com/cs/Satellite?c=Content&cid=1395246358842&d=Mobile&pagename=EBRD%2FContent%2FContentLayout



[2] EBRD.com: EBRD in Krygyzstan
http://www.ebrd.com/cs/Satellite?c=Content&cid=1395237749591&d=Mobile&pagename=EBRD%2FContent%2FContentLayout


[3] MicroCapital Universe: European Bank for Reconstruction and Development (EBRD)
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=European+Bank+for+Reconstruction+and+Development+%28EBRD%29


[4] MicroCapital Universe: Optima Bank
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=optima


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