A US$20mn loan from the European Bank for Reconstruction and Development will help Russia’s Rosbank diversify its business by pushing into the regions to tap new markets and funding the country’s vibrant small businesses.
The five-year loan is part of a US$50mn framework facility the EBRD has approved for this privately owned Russian bank, whose traditional focus has been on corporate banking but whose owners are committed to positioning it as an independent universal bank.
The EBRD has also included Rosbank among the Russian banks whose letters of credit it is ready to guarantee under its Trade Facilitation Programme, set up by the bank to simplify and accelerate East-West trade. The initial ceiling on the EBRD’s guarantees for Rosbank under this programme has been set at US$20mn.
After the completion of its merger with the OVK banking group, which has a large network of provincial outlets, Rosbank will be well poised to extend its reach into Russia’s regions and provide small business loans where they are most needed.
This transaction achieves three of the EBRD’s constant goals in Russia, says Kurt Geiger, business group director of the EBRD’s financial institutions team.
It stimulates competition in the banking sector, provides an instrument through which the EBRD can fund small businesses in remote areas of the country, and allows the bank to work with its owners, not only making the bank more efficient, but also helping achieve the highest standards of corporate governance and transparency, Geiger adds.
Rosbank is part of Interros, one of Russia’s key diversified groups which also controls Norilsk Nickel, the world’s main source of palladium.
Rosbank is the successor to Uneximbank, whose debts to the EBRD and other foreign creditors were restructured after the 1998 financial crisis.