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SME credit lines financed with International Financial Institutions and managed by local commercial Banks

SME credit lines financed with International Financial Institutions and managed by local commercial Banks . Andrea Maccanico. World Bank and International Financial Corporation European Investment Bank European Bank for Reconstruction and Development. World Bank & IFC

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SME credit lines financed with International Financial Institutions and managed by local commercial Banks

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  1. SME credit lines financed with International Financial Institutions and managed by local commercial Banks Andrea Maccanico

  2. World Bank and International Financial Corporation • European Investment Bank • European Bank for Reconstruction and Development

  3. World Bank & IFC • No individual projects specifically targeting SMEs • 3 credit lines in Ukraine and Moldova flowing through the banking system to corporate sector • Loans available to all sizes of enterprises, including SMEs but not limited to them. • No advisory services or technical assistance projects for SMEs.

  4. WB & IFC in Moldova Competitiveness Enhancement Project (CEP) supported major improvements in the business environment in Moldova, reducing the time required to register a company and comply with regulatory requirements and cutting the number of annual inspections

  5. WB & IFC in Moldova Competitiveness Enhancement Project (CEP) improved competitiveness and export capacity of businesses by supporting implementation of International Organization for Standardization (ISO) quality certification and offering exporters access to long-term financing.

  6. WB & IFC in Moldova Competitiveness Enhancement Project (CEP) 1.The systematic review of existing legislation affecting business was completed in spring 2008, resulting in major simplifications in the legal framework for business entry and operations. 2.Modernization of MSTQ infrastructure and support in implementation of modern quality management tools and techniques facilitated firms’ easier access to export markets

  7. WB & IFC in Moldova Competitiveness Enhancement Project (CEP) 3. Increased access to business-enabling finance: • 30 exporting enterprises benefited from financing for their working capital and investment on business-enabling terms from the CEP Credit Line from 2007 to February 2011, in the total amount of over US$ 10 million; • Legal infrastructure for the establishment of the first Private Credit Bureau.

  8. WB & IFC in Moldova Competitiveness Enhancement Project (CEP) • Improvement of the regulatory environment for private businesses, • attraction of foreign investment and export promotion; • Further improvement of the MSTQ infrastructure.

  9. WB & IFC in Moldova Competitiveness Enhancement Project (CEP) The World Bank will continue providing technical assistance to: • improve access to finance through Secured Transactions Reform; • modernize payments system including focus on retention of remittances within the financial system; • develop capital market – as a complementary source of funding for larger Moldovan enterprises; and d) establish a Public Credit Registry.

  10. WB & IFC in Moldova B.C. Eximbank– Gruppo Veneto Banca S.A. was established in the Republic of Moldova in 1994. Bank services its client through a network of 20 branches and 18 representative offices located throughout the Republic of Moldova. IFC investment consists in a senior loan of up to EUR20 million with a proposed maturity of up to 5 years, for further on-lending to SMEs, to Eximbank. IFC is supporting Eximbank with long term financing, sustaining Bank’s efforts in offering high quality financial services to SME sector, which has a high growth potential.

  11. WB & IFC in Moldova IFC investment is consisting of an up to 5-year senior loan of up to $15 million for further on-lending to SMEs to Moldova Agroindbank S.A.. IFC is supporting MAIB with long term financing, sustaining Bank’s efforts in offering high quality financial services to SME sector.The Bank is the market leader in terms of lending and it is recognized as an important player in SME financing and its strategy is to focus on strengthening its presence on the SME market and on development of the retail business. The bank intends to maintain and increase the customer basis, including through support of new enterprises and development of existing companies from SME sector.

  12. WB & IFC in Belarus IFC investment in Minsk Transit Bank consists of a senior loan for the amount of $10 mln equivalent with 5-year tenor and dedicated to energy efficiency and SME lending. The purpose of the investment is to provide general support to private sector of Belarus as well as to facilitate energy saving and GHG emission decrease initiatives. Established in 1994, MTB is the 12th largest bank in Belarus by assets and the 2nd largest among private banks. It is a fast growing private mid-size bank dedicated to SME and retail lending. The Bank’s main market is city of Minsk, where it holds c. 20% of the SME and retail market. Currently, MTB operates 30 outlets in 5 out of 6 regions of Belarus, including 15 outlets in the country’s capital. The Bank is an existing client of IFC since 2009 through participation in Global Trade Finance Program.

  13. WB & IFC in Belarus Purchase of an equity stake of up to 20% in BelaruskyNarodny Bank (“BNB”) and a senior loan for SME finance of up to $5 million; a GTFP line may be a part of IFC’s financial package. IFC’s existing client, Bank of Georgia, (“BoG”) has purchased a controlling stake in BNB, with a plan to transform the limited existing operations into an SME bank. For BoG, Belarus represents an opportunity to expand outside of its home market into a growth market, and in particular, one with a limited SME banking market. Since the Belarusian economy is 5-times larger than Georgia’s and yet much more limited in the development of SME banking, the opportunity has great potential for BoG. The bank has historically turned a small profit by serving a small number of Belarusian companies, most of which would be considered medium-sized or even small enterprises.

  14. WB & IFC in Belarus Belarusian Bank for Small Business The proposed project is to establish a dedicated greenfield microfinance bank in Belarus. The project will support the development of private micro and small enterprises (MSEs) in Belarus by providing financial services on a sustainable basis.

  15. WB & IFC in Belarus Belarusian Bank for Small Business The Belarusian Bank for Small Business (BBSB) was founded in 2008 by EBRD; Commerzbank AG, a commercial bank in Germany; Germany’s KfW Development Bank; the Netherlands Development Finance Company, the Dutch international development bank; ShoreBank International Limited, and Shorecap International Limited, US financial institutions; Swedfund, a venture fund established by the Swedish government; and the International Finance Corporation (IFC), the private-investment arm of the World Bank Group. As of March 2010, BBSB has a loan portfolio of USD 19.8 million, serves 1,290 clients and has 7 branches.

  16. WB & IFC in Ukraine two credit lines • export promotion • energy efficiency initiatives managed by UkreximBank

  17. WB & IFC in Ukraine Loan of up to $20 million from IFC to ProCredit Ukraine intended to enable the Bank to extend financing for energy efficiency (EE) improvements to micro-, small-, and medium-size enterprises (MSMEs) and individuals. The loan is complemented by Advisory Services to help the Bank build capacity and grow its loan portfolio in the EE segment. ProCredit Ukraine started its operations in Ukraine in 2001. The Bank specializes in providing financing to micro, small and medium-sized Ukrainian enterprises.

  18. WB & IFC in Ukraine In the context of the Joint IFI Action Plan for Central and Eastern Europe (“CEE”), SocieteGenerale (“SocGen”), which is the French bank with the largest exposure in the CEE region, has approached IFC to provide an investment package to some of its subsidiaries in the region. The Project consists of a senior loan to ALD Automotive Ukraine, fully owned by ALD International, a leasing subsidiary of SocieteGenerale Group. The purpose of the loan is to facilitate projected business growth of the Company in the face of the economic recovery in Ukraine.

  19. EIB - European Investment Bank The EIB supports the EU Neighbourhood Policy in the Eastern Partner Countries by financing projects of significant EU interest. The current EUR 3.7bn mandate runs from 2007 to 2013 and covers Russia, Ukraine, Moldova, Armenia, Azerbaijan, Georgia, and subject to future Council and European Parliament Agreement, Belarus

  20. EIB - EU Neighbourhood Policy Projects of significant interest to the EU in transport, energy, telecommunications and environmental infrastructure, and as of mid-2009 has been extended to cover also loans for SMEs via banks in Eastern Partnership countries 1 within the framework of the Joint IFI Action Plan.

  21. EIB - EU Neighbourhood Policy To support EU external action without affecting the EIB's credit standing, the EIB is offered a Community budgetary guarantee for operations carried out outside the Community, including the Eastern Partner Countries.

  22. EIB - EU Neighbourhood Policy The EIB set up in December 2009 the Eastern Partners Facility (EPF), a EUR 1.5 bn facility under which financing will be extended at the EIB's own risk (i.e. without EC guarantee). The EPF enables the Bank to support EU Foreign Direct Investments (FDI) in Eastern Neighbour countries

  23. EIB - EU Neighbourhood Policy The EPF enables the Bank to play a pro-active role in supporting the resumption of FDI in Eastern Europe and thereby contribute to the modernisation of these economies and to their integration with the EU economy.

  24. EIB - European Investment Bank in Moldova Credit line toMobiasbanca, GroupeSociétéGénérale SA, one of the leading commercial banks in Moldova. The credit line is for EUR 20 million intended to support primarily projects of small and medium sized companies, including a tranche for small and medium scale energy and environment projects promoted by mid-sized corporates and public entities. This operation lies within the SME Eastern Partnership Initiative launched at the Prague Summit in May 2009, and the framework of the joint IFI Action Plan in support of the banking systems and lending to the real economy.

  25. EIB - European Investment Bank in Moldova The loan to Mobiasbanca is the first EIB operation of this kind provided in the Eastern Partner Countries. The project is expected to contribute to Moldova’s development objectives, in that it aims at predominantly helping small and medium size enterprises to mitigate the effects of the current credit crisis and improving their access to medium and long term finance at competitive rates.

  26. EIB - European Investment Bank in Moldova Including the current loan, the Bank’s total investments in Moldova now stand at EUR 235 million, showing EIB’s strong commitment to the support of the sustainable economic development of the country in the context of the European Union’s initiatives with its Eastern Partners.

  27. EIB – EBRD – World Bank Group: Joint IFI Action Plan Launched at the very height of the economic crisis, initially pledging EUR 24.5 billion over a two-year period. The sharply higher outturn reflected the IFIs’ dynamic response to the fact that the crisis in this region was deeper than initially expected and the recovery was much more protracted.

  28. EIB – EBRD – World Bank Group: Joint IFI Action Plan Just as important as the pure financial contribution of the action plan was its role in helping the coordination of national support packages and policy dialogue involving other key stakeholders in the region and in close cooperation with the International Monetary Fund (IMF), the European Commission, and other key European institutions.

  29. EIB – EBRD – World Bank Group: Joint IFI Action Plan The unprecedented level of cooperation made a key contribution to restoring market confidence in the Central and Eastern European banking system when it was at particularly low ebb and illustrated the important counter-cyclical role played by the IFIs during the financial crisis.

  30. EIB – EBRD – World Bank Group: Joint IFI Action Plan This successful format for cooperation initially designed for crisis-hit emerging Europe, should be replicated in the future and could be applied in other circumstances and in other regions that face challenges in transforming their financial sectors, reviving lending, and increasing employment. The benefits of close IFI cooperation and coordination during the crisis should be preserved.

  31. EIB – EBRD – World Bank Group: Joint IFI Action Plan As growth resumes, the challenge is now to ensure that it is sustainable. Credit plays a vital role in private-sector led growth that should create employment. Ensuring sustainable lending is therefore a priority. The three IFIs will maintain their effort to support lending to the region in the future.

  32. Thank you all Andrea Maccanico External Expert - Informest training@fit4smes.net

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