Entrepreneurs in Romania will have access to more finance following a €12.4mn loan to ProCredit Bank Romania, the first microfinance bank in Romania. The syndicated loan is extended by the EBRD and TaiwanICDF (International Cooperation and Development Fund, Taiwan), and from commercial lenders Cordiant-International Finance Participation Trust (2004) and Austria’s Erste Bank.


Through its 14 branches in Bucharest, Brasov, Constanta, Cluj, Craiova, and Timisoara, ProCredit Bank will use the loan to on-lend to local entrepreneurs across the country wishing to expand their businesses.


ProCredit Bank Romania, formerly known as MIRO Bank, was established in 2002 and changed its name two years later to better convey its integration into the worldwide ProCredit Bank network. It is owned by the EBRD, Commerzbank, DEG, the IFC, Internationale Projekt Consult and ProCredit Holding.


ProCredit Bank Romania received technical assistance funds from the US government via the US/EBRD SME Financing Facility for institution building and training loan officers.


Hubert Pandza, EBRD business group director, says micro and small businesses are critical for economic development in Romania and have proven to be dynamic and reliable partners for the bank. Moreover, the participation of commercial partners like Cordiant and Erste Bank in the loan proves that ProCredit Romania has been successful in diversifying its refinancing sources as well as in reducing its reliance on funding from international financial institutions.


Michael Kowalski, general manager of ProCredit Bank, said that the credit line should trigger further growth in ProCredit Bank’s loan portfolio, as well as increase access to finance for many more micro and small entrepreneurs in Romania.


ProCredit Bank Romania provides micro loans for up to €10,000 (or the equivalent in Romanian lei or US dollars) with a maturity of up to 24 months. Small loans of up to €250,000 (or the equivalent in lei or US$) are made with a maturity of up to 60 months. All loans are provided on a commercial basis. Since the beginning of 2005 alone, ProCredit Bank has disbursed more than 5,000 business loans for over €25mn, and the average outstanding loan amount is below €5,000.


ProCredit Bank Romania is also becoming a leader in agricultural lending in the region. It disburses farmer’s loans (up to €
10,000 with a maximum three-year maturity) for the acquisition of seeds, fertilisers and animals, as well as rural loans (up to €50,000 with a maximum five-year maturity) for purchasing agricultural equipment, machinery and land.


So far, almost 20% of disbursed loans in 2005 have been granted to entrepreneurs operating in the agricultural sector. There are roughly 10mn Romanians living in rural areas, and the majority depend on farming for a living. Entrepreneurs in this sector are lacking access to capital and reliable banking services.


ProCredit Bank plans to expand its branch network and train staff to accomplish its foray into this untapped market segment. The credit line provided to ProCredit Bank will foster its role in agricultural lending and hence diversify the products available to micro and small businesses in the Romanian financial sector.