MICROCAPITAL STORY: European Fund for Southeast Europe (EFSE) Provides EUR 20m Loan to Serbia’s Komercijalna Banka

The European Fund for Southeast Europe (EFSE) has announced a EUR 20 million loan to Komercijalna Banka to further expand its outreach to micro and small enterprises (MSEs) in Serbia. The loan brings EFSE’s total investment portfolio in Southeast Europe to EUR 551 million.

The successor of the “European Funds for Bosnia and Herzegovina, Kosovo, Montenegro and Serbia” – a set of development finance initiatives for post-conflict reconstruction in Southeast Europe – EFSE was established in December 2005 by KfW Entwicklungsbank, the German development bank. EFSE offers long-term funding instruments to local financial institutions for on-lending to MSEs and low-income households, and also has a Development Facility that funds technical consulting and training through grants to partner institutions.

As a Public-Private Partnership, EFSE’s investors include donors, international finance institutions (IFIs) and private investors. Investors in the fund include the European Commission, the Federal German Ministry for Economic Development and Cooperation (BMZ), the Swiss Agency for Development and Cooperation (SDC), the Austrian Development Agency (ADA), the Danish International Development Agency (DANIDA), the Government of the Republic of Albania, the International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD), the Netherlands Development Bank (FMO), the European Investment Bank (EIB), Oesterreichische Entwicklungsbank (OeEB ), the official development bank of Austria.  Private investors, who currently contribute approximately 25 percent of the total fund volume, include Sal. Oppenheim, Crédit Coopératif and Deutsche Bank. EFSE is managed by Oppenheim Asset Management Services in Luxembourg.

According to EFSE’s press release, the loan to Komercijalna Banka brings EFSE’s total investment portfolio in Serbia to approximately EUR 100 million, funding 7 local financial institutions.  In total, EFSE has invested EUR 551 million in the target region of Southeast Europe, granting long-term refinancing facilities to 55 partner lending institutions, including commercial banks, specialized MSE banks, microcredit organisations and non-bank financial institutions such as leasing companies. EFSE’s investments have helped partner institutions refinance more than 150,000 loans to MSEs and private households, with more than 20,000 loans in Serbia alone.

Komercijalna Banka is one of Serbia’s largest banks, with 25 branches and 270 outlets serving over 700,000 clients.  EFSE’s loan to Komercijalna, the first granted to the bank, represents EFSE’s largest single senior loan in Serbia to date. Read more about EFSE’s loans to the region in this MicroCapital story.

The loan agreement was signed at EFSE’s 3rd Annual Meeting in Novi Sad, Serbia. The Annual Meeting hosted over 200 guests of the Fund’s stakeholders, including donors, IFIs, private investors, commercial banks and MFIs, as well as policymakers and academics. The theme of this year’s event was “mitigating strategies for alleviating the effects of the international financial crisis on Southeast Europe and the future outlook for the financial sector in this region.”

EFSE has also announced plans to invest EUR 50 million in Serbia during 2009, as part of an overall plan to invest EUR 200 million in Southeast Europe this year. As Dr. Klaus Glaubitt, Chairman of the Board of Directors of EFSE, and Head of the Competence Center for Financial Sector Promotion at KfW put it; “These numbers confirm EFSE’s commitment to foster economic development and prosperity as well as to contribute to the creation of employment in Serbia and the region of Southeast Europe as a whole. As the crisis spreads across Southeast Europe, it is crucial that financial support is made available – in particular to micro enterprises and small businesses.”

By Jaclyn Berfond, Research Assistant

Additional Resources:

EFSE: Homepage

Komercijalna Banka: Homepage

MicroCapital Story: European Fund for Southeast Europe (EFSE) Provides EUR 5m Loan to Macedonian Commercial Bank, TTK Banka A.D. Skopje (TTK); Fund will be Used to Provide Microloans to Micro and Small Enterprises (MSEs) in Macedonia

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