EFSE disburses loan to NLB Razvojna banka for micro and small enterprise lending

First international institutional credit line provided to NLB Razvojna banka

Banja Luka and Frankfurt am Main, January 18, 2010 – The European Fund for Southeast Europe (EFSE), the world’s largest microfinance investment fund, is disbursing its first loan to NLB Razvojna banka a.d. Banja Luka (NLB Razvojna banka), Bosnia and Herzegovina. The EUR 7 million senior loan provides financing to micro and small enterprises (MSE) at a time when most banks have significantly slowed down their MSE lending activities. The EFSE senior loan will help NLB Razvojna banka to significantly strengthen its MSE lending activities, especially in the remote and rural areas in Bosnia and Herzegovina’s entity of the Republic of Srpska.

EFSE’s new partner lending institution, NLB Razvojna banka, is a member of the NLB Group, the biggest Slovenian international financial group with total assets of EUR 19.8 billion (as of 30 September 2009). The bank has focused its business activities on the entity of Republic of Srpska and is now the second largest bank in this entity, in terms of total assets and market share (21%). It also has one of the largest business networks with 72 organizational units and over 500 employees.

This long-term credit line – the first international institution credit line provided to NLB Razvojna banka – contributes to a further diversification of the Bank’s funding sources and contributes to good balancing of the Bank’s assets and liabilities. It also adds to the Bank’s ability to offer longer term micro loans.

“With this loan the Fund will enable NLB Razvojna banka to create financial opportunities for approximately 500 micro entrepreneurs and small enterprises, most are located in the rural regions of the entity of Republic of Srpska”, said Ms. Sylvia Wisniwski, Chief Operating Officer of EFSE.

Mr. Radovan Bajić, Manager of NLB Razvojna banka, said: “This credit line represents a new funding source for long-term loans to entrepreneurs and MSEs. According to its business activities and the market position in the Republic of Srpska and Bosnia and Herzegovina, the NLB Razvojna banka has shown that it is able to take loans of international financial institutions in addition to utilising significant sources of domestic deposits and citizens’ savings. This illustrates the ability of continuation of dynamic credit portfolio growth through multiple sources of liability financing.
Credit lines for entrepreneurs and MSEs that the Bank will place from EFSE’s loan is one of the most favourable in the banking market of Bosnia and Herzegovina and will allow us to maintain our competitive positioning. We believe this is the beginning of a long term partnership between NLB Razvojna banka and EFSE.”

At 27%, Bosnia and Herzegovina represents the largest share of EFSE’s investment portfolio. This senior loan to NLB Razvojna banka complements the Fund’s already diversified portfolio in the country. Products range from MSE (54%), rural (14%) to housing loans (32%) offered by 9 microfinance institutions and 9 commercial banks. The Fund facilitates over 40,000 loans to MSEs and private households in Bosnia and Herzegovina, amounting to over EUR 126 million (as of 30 September, 2009).

The Fund currently has exposure to NLB Group members in Montenegro, FYR Macedonia and Kosovo, as well as another NLB Group member in the Federation of Bosnia and Herzegovina (NLB Tuzlanska banka). With this new investment cooperation, the strategic partnership between the NLB Group and EFSE has been further expanded.

About the European Fund for Southeast Europe (EFSE)
With an investment portfolio of EUR 578.8 million (as of 31 December, 2009), the EFSE is the world’s largest microfinance investment fund. Aimed at fostering economic development and prosperity in the region of Southeast Europe, the Fund offers long-term funding instruments to qualified local financial institutions for on-lending to MSEs and low-income private households. Since its inception in December 2005, the Fund has facilitated approximately 200,000 loans to MSEs and private households, totalling over EUR 1 billion.

EFSE also runs a Development Facility whereby grants enable technical consulting and training measures to institutionally strengthen the partner finance institutions. Initiated by KfW, the EFSE is an investment company that is under the jurisdiction of the Grand Duchy of Luxembourg in the form of a public limited company, qualifying as a société d'investissement à capital variable ("SICAV-SIF"). As the first Public-Private Partnership of its kind, combining public funding and private investment, the Fund has a strong investor base of donors, international finance institutions and private institutional investors, including: European Commission, Federal German Ministry for Economic Development and Cooperation (BMZ), the governments of Austria, Switzerland, Denmark and Albania, KfW, International Finance Corporation, FMO Netherlands Development Bank, European Bank for Reconstruction and Development, European Investment Bank, OeEB Oesterreichische Entwicklungsbank (Development Bank of Austria), Sal. Oppenheim, Deutsche Bank, BN&P Good Growth Fund, ESPA VINIS MICROFINANCE, Finance in Motion and other private investors.

About NLB Razvojna banka a.d. Banja Luka
NLB Razvojna banka a.d., Banja Luka constantly strengthens its market position, resulting in its role as one of the leading banks in the market of the Republic of Srpska within Bosnia and Herzegovina. We are a universal bank, providing all financial services to all our clients, retail clients, corporates, small and medium enterprises as well as other clients who operate in Republic of Srpska. Our ability to support all the projects of our clients is our competitive advantage. High liquidity, proficiency and quality of assets are the visible characteristics of business operations, that were recognized by our clients.

The Bank successfully operated during 2009, achieved profit and maintained the high standards of business activities, which was confirmed by international financing institutions.
NLB Razvojna banka has a significant cooperation and partners’ relationship with international and domestic institutions, especially with Funds and Investment-Development Bank of the Republic of Srpska a.d. Banja Luka, and is involved in all state’s and local communities programs.

The Bank’s business goals are directed towards the further service development, cooperation with clients and social community, extension of business network and operating risk management. Acquiring the credit line with EFSE will help us to support the projects of our MSE clients, to intensify our cooperation with this segment and to give even more focus to this sector which is the main driver of the economic development in our country. We are proud to be part of this initiative.

Media contact

European Fund for Southeast Europe  Mr. Samir Djikić, Communications Manager, EFSE Tel: +49 (0)69 / 977 876 50-26 E-mail: press@efse.lu

NLB Razvojna banka a.d. Banja Luka  Mrs. Ljiljana Čičić, Public Relations Officer Tel: +387 51 245 558 E-mail: lj.cicic@nlbrazvojnabanka.com Web:    www.razvojnabanka.com