To help meet the increasing investment needs of individuals, small businesses and municipalities in central and eastern Europe, the EBRD will provide as much as €150mn to regional banks belonging to Austria’s Volksbank Group.
The EBRD will support Volksbank’s subsidiaries, which are providing an increasingly diverse array of finance to clients in the region, including loans, especially for local entrepreneurs; mortgages, to meet the growing demands of people wishing to own their own homes; and medium to long-term finance to small and medium-sized enterprises (SMEs) and small and medium-sized municipalities, which otherwise find such finance scarce.
As part of this growing relationship with Volksbank, the EBRD has signed four subordinated loan facilities totalling €37.5mn to regional banks in Bosnia and Herzegovina (€7.5mn), Czech Republic (€10mn), Hungary (€10mn) and Slovenia (€10mn). These facilities will not only provide medium and long-term funds to Volksbank clients, they will also strengthen the capital bases of each bank, allowing them to further expand their business in the region.
The bank is also providing an additional €2.6mn for a 14.5% stake in the Volksbank Group subsidiary in Serbia and Montenegro.
With banks spread across the region, Volksbank Group employs more than 1,500 local staff. The agreements build on a solid base of experience between the EBRD and Volksbank, bringing to eight the number of projects the two have worked together on in six countries. With scope to increase its exposure to Volksbank to €150mn, the EBRD expects the cooperation to deepen significantly going forward.