The European Bank for Reconstruction and Development (EBRD), Bank of Tokyo-Mitsubishi UFJ, Calyon and Sumitomo Mitsui Banking Corporation Europe have completed the syndication of a US$300mn loan to MDM Bank to help one of Russia’s largest private banks expand its retail activities, extend longer-term funding and increase small business lending.

The loan was originally offered in the syndication market as a US$150mn facility, but the EBRD had expected it to be oversubscribed and had allowed for it to grow to US$225mn. In the event, strong market demand resulted in the final figure being increased to US$300mn.

The EBRD has played a key role in promoting financial intermediation in Russia and the Bank’s second loan to MDM Bank fits into our strategy of helping the development of the Russian banking sector, EBRD president Jean Lemierre said at a signing ceremony in London.

Given the importance of stimulating enterprise investment, among SMEs in particular, in order to achieve a genuine economic diversification in Russia, it is particularly encouraging that this loan will enable MDM Bank to extend longer term finance to its clients in this sector, Lemierre added.

The loan was jointly arranged and fully underwritten by the EBRD, Bank of Tokyo-Mitsubishi UFJ, Calyon and Sumitomo Mitsui Banking Corporation Europe.  The EBRD is lender of record for the full amount and is providing a five-year A loan using US$100mn of its own funds. The remaining US$200mn is being syndicated to 29 commercial banks, which are advancing three-year loans under the EBRD’s A/B loan structure.  The B Loan was priced at Libor plus 0.9% per year.

The syndicate group includes Bank of Tokyo-Mitsubishi UFJ, Calyon, Sumitomo Mitsui Banking Corporation Europe, Dresdner Bank, Alpha Bank, Bank Hapoalim, Bank of Taiwan, Chinatrust Commercial Bank, Mashreqbank, Mega International Commercial Bank, State Bank of India, Taiwan Cooperative Bank, Bank SinoPac, HSBC Bank, Agricultural Bank of China Hong Kong, American Express, Caixa Geral de Depositos, Land Bank of Taiwan, Raiffeisenlandesbank Obersterreiche, Raiffeisenlandesbank Niederosterriche-Wien, Shanghai Commercial and Savings Bank. First Commercial Bank, Banco BPI, Banque BIA, Hypo Alphe-Adria International, Mizrahi Tefahot Bank London, Coperatieve Centrale Raiffeisen-Boerenleenbank, Rabobank, WGZ Bank Westdeutsche Genossenschafts-Zentralbank, Emro Finance Ireland.

The expansion of lending to SMEs is an important part of MDM Bank’s development strategy, says Michel Perhirin, CEO and chairman of the management board of MDM bank. Thanks to this new credit from the EBRD and syndicate of banks, we intend to build on the achievements made in 2006 and continue successfully extending credit to small enterprises via our wide branch network, Pehrerin adds.

Ranked 10th among Russian banks in terms of total assets, MDM Bank operates as a fully-fledged universal bank with an extensive regional network providing a wide range of services to both corporate and retail clients.

Last October, the EBRD made a five-year US$50mn loan to MDM Bank under its Russian Small Business Fund (RSBF) programme launched in 1994 to encourage on-lending to small businesses and grassroots entrepreneurs.

In 2006, MDM Bank achieved a portfolio growth rate of over 350% in this sector.  MDM Bank’s small business programme is currently running throughout its entire network in over 32 regions in Russia. Its combined loans to micro, small and medium-sized businesses now exceed US$170mn. The beneficiaries are more than 4,000 clients, 90% of them in Russia’s regions.