The European Bank for Reconstruction and Development (EBRD) is co-arranging a US$200mn syndicated loan for International Moscow Bank (IMB) in the first of a string of deals the bank is working on to provide Russian banks with long-term funds so they can give Russian businesses much needed access to longer-maturity credit.

The EBRD portion will consist of a three-year, US$30mn loan earmarked for IMB on-lending to Russian small and medium-sized enterprises, particularly in less-developed regions. Co-arrangers for the remaining US$170mn are HVB and Nordea (IMB’s two largest shareholders), Commerzbank and Citibank. The tenor of the commercial portion of the syndicated loan is one year, with an option to extend for a further year.

Kurt Geiger, EBRD business group director for financial institutions, says 30 commercial banks have agreed to participate in the syndicated loan, which is oversubscribed, demonstrating strong market demand for quality Russian assets.

The US$30mn loan is the first under a new US$220mn EBRD framework facility which will allow the bank to double its exposure to the IMB group. The EBRD has a 10% stake in IMB, whose capital is owned by a mixture of foreign and Russian banks.

The bulk of the new EBRD funding will take the form of senior loans or subordinated debt to help IMB strengthen its retail franchise and thus reach out beyond its traditional banking niche in which it serves major Russian corporations. IMB’s future strategy will include targeting medium-sized Russian corporate customers and small businesses, not only in Moscow but also in Russia’s regions.

The framework facility will also allow the bank to fund the group’s leasing arm, IMB-Leasing, as part of a broader EBRD effort to stimulate what is often the only way for medium-sized Russian companies to finance capital expenditure.

Another possible target is mortgage lending in a country where, mainly due to the lack of long-term financing from banks, only 5% of the real estate in Russia is bought through a bank loan.