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

The European Fund for Southeast Europe (EFSE), a Luxembourg based microfinance fund has agreed to lend EUR 5 million to TTK Banka A.D. Skopje (TTK), a commercial bank based in Skopje, Macedonia as part of a loan agreement to help TTK further expand its outreach to micro and small entrepreneurs in the Republic of Macedonia. In a news release found on the Frankfurt School of Finance and Management website, Nikolche Petkoski, a member of the Board of Directors at TTK said that the loan, which would help TTK to support and increase access to finance for micro and small businesses in Macedonia, was particularly important during the present ‘times of economic uncertainty’.

EFSE was established in Luxembourg in 2005 with the aim to foster economic development and prosperity in the Southeast Europe region through the provision of financial assistance, notably to micro and small enterprises (MSEs) and to private low income households. The Fund is a public-private partnership. Public 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 International Finance Corporation, the European Bank for Reconstruction and Development, the German Development Bank KfW, the Netherlands Development Finance Company and the European Investment Bank. Private investors include the European Bank Crédit Coopératif, the Deutsche Bank and Europe’s private banking group Sal.Oppenheim. The Frankfurt School of Finance & Management is EFSE’s advisor and Oppenheim Asset Management Services is the fund manager.

Besides the investment fund, EFSE has a development facility through which it funds technical consulting and training. More information on the current projects undertaken by the development facility can be found here. EFSE’s target countries include Bosnia and Herzegovina, Romania, Serbia, Kosovo, Montenegro, Moldova, Macedonia, Albania, Bulgaria and Ukraine. MicroCapital had recently reported on EFSE’s activities in Kosovo and Bosnia and Herzegovina. As of Spetember 2008, EFSE had a total asset base of USD 716.8 million of which USD 399 million was allotted to microfinance investments and USD 15 million was committed to microfinance investments but not yet disbursed. Since 2005, EFSE has financed more than 120,000 micro and small loans to entrepreneurs and low-income households throughout Southeast Europe.

TTK Banka A.D. Skopje (TTK) was established in July 2006 as a merger of Teteks-Kreditna Banka A.D. Skopje and Tetovska Banka A.D. Tetovo. No individual websites for the two banks were found. TTK is a medium-sized commercial bank offering products and services to retail and corporate clients and operates through three main branches and 27 sub-branches in 19 cities throughout Macedonia. As of December 2007, TTK’s shareholders include the Macedonian textile company Teteks AD Tetovo with 43% stake and the European Bank for Reconstruction and Development (EBRD) with a capital share of 25 percent. TTK had a total asset base of USD 103 million as of December 2007.

Since its inception, EFSE has extended loans to three banks in Macedonia – IK Banka, Tutunska Bank and ProCredit Bank Macedonia. This loan by EFSE  to TTK builds on its continued support to promote economic development in Macedonia. According to the World Bank, the landlocked country of Macedonia has nearly 22 percent of its population living below the poverty line. The 2008 Human Development survey of the United Nations gives Macedonia a rank of 68 out of 179 countries, measured on the basis of standard of living, life expectancy and literacy. So far, in terms of meeting the first of its Millennium Development Goals by 2015 (i.e. reduce, by half, the proportion of population living on less than one dollar a day), the United Nations cites ‘insufficient information‘ is available on Macedonia’s progress towards poverty reduction.

By Bharathi Ram, Research Assistant

Additional Resources:

Frankfurt School of Finance and Management News Release


Aug 22, 2007: EFSE provides funding to Kosovo

TTK Banka

European Fund for Southeast Europe

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