MICROFINANCE STORY: The European Bank for Reconstruction and Development (EBRD) Lends $10M from Its Microfinance Program to Minsk Transit Bank (MTB) of Belarus

The European Bank for Reconstruction and Development (EBRD), a multilateral development institution that fosters private sector investment in 30 countries in Central Europe and Central Asia, is lending USD 10 million to Minsk Transit Bank (MTB), a commercial bank established in 1994 and based in Minks, Belarus. According to Moody’s, MTB reported total assets of USD 150 million in 2007. MTB is one of six EBRD partner banks in Belarus. The five-year loan to MTB will be used to lend to privately-owned micro, small, and medium-sized businesses (MSMEs). As stated by the EBRD, the funding is to help small businesses in the country weather the crisis.

MTB is the first Belarus bank to receive a loan from the augmented EBRD plan, called the Financial Sector Framework Facility, a microfinance program in the country. The program’s fund was doubled from USD 50 million to USD 100 million. The increased framework broadens the range of financial products available to the EBRD’s financial partners. Syndicated and subordinated loans, as well as mortgage loans and equity will now be available. In addition, the EBRD will open for the first time the framework to leasing and insurance companies. The EBRD Board of Directors approved this new framework in June 2008 since the USD 50 million provided under earlier facilities had already been almost fully committed. In February 2007, Minsk Transit Bank became the third bank-participant of the program with a USD 4.0 million credit line for micro-lending and for lending to small and medium enterprises. As of 2007, the EBRD’s project included a loan to MTB, totaling EUR 12.2 million (estimated USD 17.2 million) under the Belarus MSE Financing Facility. It also provided a EUR 16 million (USD 22.6 million) under a Regional Trade Facilitation Programme, a program aimed to support foreign trade with and within the EBRD’s countries of operations and to provide liquidity to the trade system.

It is estimated there are some 215,000 micro and small businesses (MSEs) in Belarus. As of the end of March 2009, the banks participating in the EBRD program had advanced over 15,000 microloans; 52 percent going outside Minsk and into a regional network covering Brest, Vitebsk, Gomel, Grodno and seven other centers. A total of EUR 2 million (estimated USD 2.8 million) in donor grants has been secured under the EU’s Neighbourhood Investment Facility to fund technical support for this EBRD program. The main focus of working with local banks remains MSME financing. In total, 4,273 new MSME subloans with a volume of USD 69 million were extended to clients in 2008 with the support of Microlending Technical Assistance and EBRD financing. The EBRD’s focus in the region is to invest in the private sector where it has a 55 percent stake in the private in Belarus. Refer to here for a MicroCapital story that covers past EBRD investments in Belarus.

The EBRD, founded in 1991 and headquartered in London, promotes microfinance through its Micro, Small and Medium Business Program, which extends access to formal finance for small businesses. Since it was established, the EBRD has provided more than EUR 14.8 billion (estimated USD 20.6 billion) through its small business lending programs to support micro, small and medium-sized enterprises.  It has over 3.1 million in MSME loans and MSE lending programs in 19 countries. The EBRD has dedicated USD 1 billion to microfinance in the past two years through debt, equity facilities, and technical assistance. See MicroCapital’s overview of EBRD´s investments over the past two years.

MTB is headquartered in Minsk, Belarus, and ranked Belaruseleventh largest bank at the end of the 2008 as measured by assets. According to Moody’s, as of November 2008, MTB reported total equity of USD 42 million and net income of USD 3.8 million. It also provided MTB an B2/NP/E+ rating. Its rating was constrained by its small size and underdeveloped franchise. It is a joint-stock company with four branches. The major shareholder is a private car dealing and service holding company, Atlant-M with about 90.3 percent. A state company, Minskintercaps, holds 3.4 percent in the bank, the Minsk city territory state property fund has a 2.9 percent stake, the company Capsul Technology International holds 2.5 percent in the bank, Atlant-M Stroy has 0.79 percent, and Minsk-based company Milavitsa holds 0.18 percent in the bank.

By Uyen Tran, Research Assistant

Additional Resources:

EBRD: home; press release; Belarus MSE/SME Financing Faciity Extension; 2007 projects; Belarus

Minsk Transit Bank: home; statistics; Moody’s rating

Export BY: Minsk Transit Bank says balance sheet assets up 44.6% on year in Jan-Oct

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