The European Bank for Reconstruction and Development (EBRD) and Société Générale are teaming up to boost lending to the real economies of Eastern Europe in a direct response to the impact of the global economic crisis.

The EBRD is planning to make investments of around €400mn via loans to several Eastern European subsidiaries of the French banking group, which is particularly active in that region.

The EBRD investment is part of a joint pledge by the EBRD, the World Bank Group and the European Investment Bank (EIB) to provide over €24bn in support of the banking sectors in the region and to fund lending to businesses hit by the global crisis.

The joint IFI Action Plan acknowledges that IFIs, central banks and parent banks are the only new sources of funding to Eastern European financial institutions at this time of crisis. Société Générale has made clear its commitment to the region.

The majority of the EBRD funding to the subsidiaries is for SME lending with the main aim of supporting this sector via loans to Société Générale units that are of systemic importance in their countries and which have SME sector expertise.

“Société Générale is a long-standing partner of the EBRD with a strong commitment to Eastern Europe. We are working together to make sure there is a continued flow of lending to the economies of the EBRD region at this time of continued crisis,” says EBRD president Thomas Mirow.

"This joint initiative, which highlights the long-standing relationship between EBRD and Société Générale Group, will help address the current challenges faced by economies in Central and Eastern Europe, as it will increase Société Générale's capacity to serve and accompany its clients in the region," adds Frédéric Oudéa, chairman and CEO of Société Générale.

In addition to the new funding provided under the joint IFI Action Plan, the initiative has been a platform for a broad response to the crisis in Eastern Europe involving the IFIs, the European Commission, home and host country regulators as well as the major western banking groups active in Eastern Europe.

Its aim has been to mount a collective response to the crisis that keeps the immediate flow of credits running to Eastern European economies but also lays the ground for continued engagement in the region by the major banking groups.

The EBRD expects to invest a total of over €3bn in support of the financial sector this year, focused on systemically important financial institutions and including other joint initiatives with major banking groups active in the region.