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The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has signed an agreement to provide a six-year US$5mn loan to joint Belarussian-Russian venture Belgazprombank for on-lending to private enterprises.

Belgazprombank is the second largest privately-owned commercial bank in Belarus.

The IFC loan will give Belgazprombank access to long-term funding which is not available in the market from other sources and will help the bank meet the increasing demand for term finance from its SME clients.

IFC’s funding will help the bank implement its expansion strategy and strengthen its position in all market segments in which it currently operates, with a particular focus on private small and micro enterprises.

“The agreement signed between Belgazprombank and IFC is a very positive sign that reaffirms Belgazprombank’s leading role in the Belarusian financial markets. This investment opens additional opportunities for the bank and our clients,” says Victor Babariko, the chairman of Belgazprombank’s board.

IFC’s strategy in Belarus is to foster the private sector development through advisory services and lending operations. IFC’s loan to Belgazprombank is a way for IFC to reach a larger number of private companies in Belarus and to strengthen the country’s financial system.

“IFC welcomes the opportunity to provide Belgazprombank with long-term funding to help the bank diversify and expand its loan portfolio. We hope that this investment will lay a solid foundation for our future long-term work together and promote the development of the small business sector, which is key for economic growth and stability,” comments Edward Nassim, IFC’s director for Central Eastern Europe, at the signing ceremony in Minsk.

Belgazprombank was established in 1989 as Bank Ekorazvitiye by a group of private shareholders. It was renamed as Bank Olimp in 1993 and later, in 1997, as Belgazprombank following the purchase of a majority stake (67.8%) by the Gazprom Group.

As of December 2004, the bank’s assets are US$100mn and equity of US$18mn.