The European Bank for Reconstruction and Development (EBRD) is acquiring a 25% stake in the Kyrgyz Republic’s Ineximbank through a US$1.4mn investment aimed at helping the sixth-largest Kyrgyz bank to develop into a strong medium-sized lending institution with a focus on small enterprises and retail loans.

The EBRD acquisition is being made alongside a strategic investment by Kazakhstan’s Temirbank, whose stake in Ineximbank will eventually amount to 46%. This is the second example of cross-border cooperation among Kyrgyz and Kazakh commercial banks after the acquisition of Kyrgyz Avto Bank by Kazakhstan’s Kazkommertsbank last year.

Ineximbank was set up in 1996 and its capital at the end of 2002 was US$2.2mn, while its assets stood at US$8.2mn. The new investments involve a capital increase of around US$3.1mn, which will bring Ineximbank’s capital base to more than US$5mn.

Strengthening Ineximbank’s capitalisation will support the bank’s further growth and development of its retail business, as well as promote regional cooperation between Kyrgyz and Kazakh banks, says Kurt Geiger, business group director of the EBRD’s financial institutions team.

The EBRD’s aim is to foster competition and transparency in the Kyrgyz banking sector and it is pinning high hopes on the improvements in corporate governance standards and management techniques that such an investment should help stimulate, Geiger added at the signing ceremony.

This transaction will allow Ineximbank to benefit from the know-how acquired by Temirbank in the fast-growing Kazakh banking sector, said Oleg Kononenko, chairman of the board of Temirbank, commenting on his bank’s investment in the Kyrgyz market.

The EBRD will be represented on the supervisory board of Ineximbank.