EBRD and EFSE support micro and small businesses in Moldova

$10 million credit line to ProCredit Bank

Frankfurt am Main, February 09, 2010 – The EBRD and European Fund for Southeast Europe (EFSE) are boosting the availability of financing to private businesses in Moldova with a $10 million loan to ProCredit Bank in Moldova for on-lending to micro and small enterprises (MSEs).

ProCredit Bank is the successor of the financial company ProCredit in Moldova, one of the leading institutions in the country providing loans to small businesses. It has a wide geographical coverage, including small towns and villages.

In the wake of the global financial crisis and due to scarce liquidity, as well as banks’ tightened risk management policies, lending activities in Moldova have reduced considerably, with micro and small businesses being particularly affected.

The loan extended to ProCredit Bank will help the institution diversify its funding base and maintain the provision of credits to small enterprises in the current difficult conditions.  To help ProCredit Bank and its customers mitigate risks associated with lending in foreign currencies, half of the credit line is offered in Moldovan lei equivalent.

The proceeds of the five-year credit line will be used to finance investments and working capital of local small businesses with medium-term loans.

Syndicated under the EBRD’s A/B structure, the Bank is retaining $5 million on its own account, with the remaining $5 million co-financed by the EFSE.

“Supporting the growth of the private sector in Moldova is one of EBRD’s priorities. Through this transaction the EBRD is reinforcing its commitment to helping local entrepreneurs develop their businesses by providing much-needed financing, particularly in the current challenging environment” said Henry Russell, EBRD Director for Small Business Finance and Energy Efficiency.

“The loan EBRD and EFSE are providing in this syndicated structure is an important signal that small business lending can and will resume in Moldova. A part of the funding will be offered in Moldovan Leu, which will allow ProCredit Bank to provide its customers with long term local currency funds in line with the principles of responsible finance they have subscribed to,” said Elvira Lefting, Chief Investment Officer of the EFSE.

“This loan contributes to the continuous fulfilment of the ProCredit’s strategic mission in Moldova: supporting local entrepreneurs and the overall development of the Moldovan economy. In the current environment entrepreneurs need access to longer term loans even more than before, in order to develop further their businesses, helping the country recover after the financial crisis.” stated Dr. Ilinca Rosetti, General Manager of ProCredit Bank in Moldova.
In the last ten years ProCredit institutions in Moldova, the financial company and the bank, provided loans to more than 13,000 Moldovan entrepreneurs.

In 2009 the EBRD offered close to €40 million in credit lines to Moldovan banks and micro finance institutions for on-lending to local micro, small and medium-sized businesses. Overall, since the beginning of its operations in Moldova, the EBRD has committed close to €350 million across various sectors of the country’s economy, attracting additional investment in excess of €245 million.

The EBRD, owned by 61 countries and two intergovernmental institutions, is supporting the development of market economies and democracies in countries from central Europe to central Asia. www.ebrd.com

The microfinance investment fund EFSE combines funding from various governments, international financial institutions and institutional private investors. Aimed at fostering economic development and prosperity in the region of Southeast Europe. the Fund offers long-term funding instruments to local financial institutions for on-lending to micro and small enterprises and low-income private households.

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

European Bank for Reconstruction and Development  Ina Coretchi, Tel: +44 (0)20 7338 7874 E-mail: coretchi@ebrd.com