The European Bank for Reconstruction and Development (EBRD), an international finance institution, will provide a RUB 450 million unsecured loan, the equivalent of over USD 18.5 million, to NBD Bank, a commercial bank in Russia that specializes in providing loans to micro, small, and medium-sized enterprises (MSMEs) and is minority-owned by EBRD. NBD bank will use the funding to provide loans to micro and small enterprises(MSEs). The loan will be in local currency and have a maturity of three years, thus allowing NBD Bank to provide loans of longer maturities than are available to most MSEs in Russia. This investment is under the framework of the Russia Small Business Fund (RSBF), an initiative launched by EBRD in 1993 at the G-7. The initiative now involves 18 Russian banks and has received loans and grants from donor countries including the United States, Japan, the UK, France, Germany, Canada, and Switzerland. As of the end of 2008, EBRD has operating assets worth EUR 5.2 billion, the equivalent of over USD 7 billion.
By Christopher Maggio, Research Assistant
About
European Bank for Reconstruction and Development (EBRD)
Description
The European Bank for Reconstruction and Development (EBRD) is an international finance institution headquartered in London. The bank began operations in 1991 upon the agreement of 40 countries and is now owned by 61 countries as well as the European Investment Bank and the European Union. It aims to finance operations that are both commercially viable and assist development in 29 countries in Central Europe and Central Asia. It does this by providing loans, debt securities, equity investments, guarantees and technical assistance to micro- and small businesses as well as commercial banks and non-bank microfinance institutions (MFIs). As of the end of 2008, EBRD has operating assets worth EUR 5.2 billion, the equivalent of over USD 7 billion.
About
NBD Bank
Description
NBD Bank is a commercial bank based in Nizhny Novgorod, Russia that specializes in loans to micro, small, and medium-sized enterprises (MSMEs). It was founded in 1992 and its products include loans, leasing, settlement and cash services, and deposits. As of December 12, 2007, the bank has a network of 17 offices in three Russian regions: the Nizhny Novgorod and Ivanovo regions and the Chuvash Republic.
Additional Resources:
MicroCapital’s Microfinance Universe profile: European Bank for Reconstruction and Development (EBRD)
MicroCapital’s Microfinance Universe profile: NBD Bank
EBRD press release:
EBRD 540 million rouble loan to Russia’s NBD Bank
Funding aims to boost small business access to local bank lending
The EBRD has signed off on an unsecured three-year loan of 540 million
roubles (equivalent to $18 million) to NBD Bank, a long-standing partner
in Russia, to help tackle one of the most negative legacies of the
financial crisis, the difficulties faced by the country’s micro and
small businesses in accessing bank credit.
The targeted loan is part of the EBRD’s anti-crisis response. It is
being made in local currency to suit clients in this vital sector of the
Russian economy who rely on rouble revenue streams and have difficulties
to borrow in foreign currency due to their inability to hedge the
resulting exchange rate risks.
Crucially, the three-year maturity will allow NBD-Bank to extend loans
with far longer maturities than micro and small businesses can at
present count on in the Russian market.
The loan is being made within the framework of the EBRD’s Russia Small
Business Fund (RSBF), launched at the initiative of the G-7 in 1993.
NBD-Bank was one of the first to join the programme in which a total of
18 Russian banks are now participating.
The EBRD’s current portfolio of outstanding Russian bank loans
specifically earmarked for on-lending to micro and small businesses
amounts to around $440 million.
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