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The EBRD is launching a new strategy to shift the focus of its investment to Russia, Southeast Europe, the Caucasus and Central Asia, re-allocating resources from central and eastern Europe where the successful transition to a full market economy is nearing completion.

The new five-year strategy, endorsed by the EBRD’s board of governors at their annual meeting in London recently, reflects the historic achievements of the countries of central and eastern Europe in their economic and political transformation. 

The strategy recognises these achievements and envisages that the eight countries which have joined the EU will have graduated from the EBRD by the end of 2010. 

The resources released by reduced investment and by consolidating and closing offices in these most advanced countries will be devoted to promoting transition in countries to the east and south of the EU, including Russia.

In addition to shifting resources, the strategy sets overall targets for business volume for the region which rise over the period to about €
4bn per year in the coming five years.

Net profits in 2005 of €
1.5bn make it possible for the bank to accept higher country or financial risk as well as taking on more participation in equity. 
Apart from the geographical shift, the EBRD strategy is based on a new business model that stimulates innovation and carefully adapted investment strategies that align with particular country needs.

There will be more work to develop capital markets, including developing securitisation, mortgage markets and local currency financing, such as the recent launch of rouble bonds in Russia and associated establishment of the MosPrime benchmark rate.

According to EBRD president Jean Lemierre, with constant innovations and different investment approaches required for the countries outside the EU-8, the bank will look very different in five years” time from how it looks now and certainly from how it looked five years ago.

The EBRD is changing and is confident of repeating the successes of the past in the new environment of the future, he says.

The strategy was unanimously approved by the board of directors on May 10 in the context of the Capital Resources Review which determined the bank has adequate capital to operate for the next five years.