MICROCAPITAL.ORG STORY: The European Bank for Reconstruction and Development (EBRD) Increases Equity Stake in Russia’s Transcapitalbank from 25 Percent to 28.6 Percent

The European Bank For Reconstruction and Development (EBRD) is preparing to increase its ownership of Transcapitalbank, a Russian bank that provides loans to “medium-sized corporates, as well as micro and small businesses” and individuals [1,2,3] The subscription to a new issue of ordinary shares will increase EBRD’s stake from 25 percent 28.6 percent [1].

This equity increase will increase Transcapital’s capital base by 1.2 billion roubles, the equivalent of over USD 43 million [1]. In total, EBRD has provided USD 166 million in funding for Transcapital since 2004 [1]. This move comes after EBRD originally acquired its 25 percent stake at the end of 2006 [4]. Over the past five years, EBRD has provided funding for Transcapital through “subordinated debt, credit lines for micro, small and medium-sized businesses, trade finance facilities, mortgage lending and equity capital” [1].

The European Bank for Reconstruction and Development is, according to its website, “the first international financial institution of the post Cold War period” [2]. Headquartered in London, the bank began operations in 1991 upon the agreement of 40 countries, and is now “owned by 61 countries and two intergovernmental institutions” [2]. It aims to “finance operations that are both commercially viable and assist development” in 29 countries in Central Europe and Central Asia [2]. 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) [5]. Microcapital has covered many of the EBRD’s investments including, most recently, the acquisition of 25 percent of Agroinvestbank, a commercial bank in Tajikistan [6,7]. According to the MIX Market, the microfinance information clearinghouse, EBRD has 112 active microfinance investments and has over USD 726.3 million in funds allocated to microfinance ventures [5].

Transcapitalbank has provided “banking services for individuals and legal entities since 1992” [3]. It serves corporates, micro, small and medium enterprises, as well as individuals [3]. It has 69 outlets in 17 regions of Russia [3]. According to their 2008 financial report, their number of corporate clients increased from 16.5 thousand to 22 thousand, individual clients increased from 65 thousand to 99 thousand, and their loan portfolio increased by 1.26 times, reaching 39.2 billion roubles, the equivalent of over USD 1.3 billion [8].

By Christopher Maggio, Research Assistant

Bibliography

[1] EBRD press release entitled ‘EBRD to raise its stake in Russia’s Transcapitalbank’: http://www.ebrd.com/new/pressrel/2009/091027a.htm
[2] EBRD: http://www.ebrd.com/
[3] Transcapitalbank: http://www.transcapital.com/eng/english/about/
[4] Transcapitalbank Equity Participation Project Summary Document: http://www.ebrd.com/projects/psd/psd2006/36945.htm
[5] EBRD on the MIX Market: http://mixmarket.org/funders/ebrd
[6] MICROCAPITAL.ORG STORY: EBRD Becomes Shareholder in Tajikistan’s Agroinvestbank: https://www.microcapital.org/microcapitalorg-story-ebrd-becomes-sharehold…
[7] Agroinvestbank: http://www.agroinvestbank.tj/eng/
[8] Transcapitalbank 2008 financial report: http://www.transcapital.com/_upload/editor_files/file0037.pdf

Similar Posts: