EFSE provides USD 5 million loan to Azerbaijan’s Bank Respublika for small business lending

Ohrid, FYR Macedonia, June 09, 2010 – The European Fund for Southeast Europe (EFSE) signed a loan agreement of USD 5 million with Azerbaijan’s Bank Respublika for on-lending to small business in Azerbaijan today during its annual meeting in Ohrid, FYR Macedonia. It is the first investment of EFSE in the country.

Bank Respublika will use the proceeds to finance investments and working capital of small businesses in Azerbaijan with long-term loans up to EUR 100,000, thus addressing the lack of credit available to micro and small enterprises (MSEs) in the country.

Bank Respublika, the 7th largest bank in Azerbaijan by total assets, is a universal commercial bank providing a wide range of banking services to corporate clients, small and medium enterprises and individual customers. The bank is dynamically expanding its product range and its branch network.

EFSE’s loan to Bank Respublika will support the Bank’s aims to significantly expand lending to MSEs, particularly in rural areas of Azerbaijan where there is significant unmet demand for financing. The situation has been further aggravated by the financial and economic crisis.

Especially in rural and semi-urban areas in Azerbaijan, the crisis has caused many banks to close branches in an effort to cut costs. As a result, the financing gap in these areas has been increasing and has implied negative consequences in particular for micro and small enterprises, almost two thirds of which are located outside urban areas and operate in the agricultural field.

EFSE’s loan to Bank Respublika is being provided under the European Neighbourhood Small Business Growth Facility (ENBF), a dedicated European Neighbourhood window within the EFSE structure.

EFSE began its operations in Azerbaijan in December 2009, when it expanded its business to include additional countries of the European Eastern Neighbourhood Region: Azerbaijan, Armenia, Georgia and Belarus.

Over the next five years, EFSE is expected to provide financing in a total amount of EUR 300 million to financial institutions in the European Eastern Neighbourhood region, including Moldova and Ukraine. This will allow EFSE to facilitate approximately 100,000 business loans to MSEs and housing loans to low-income private households in the region.

Since its inception in December 2005 until December 2009, EFSE has offered a total of EUR 684 million in financing to commercial banks, small-business banks and microfinance institutions throughout Southeast Europe. These partner lending institutions have on-lent EUR 1.1 billion of EFSE funds in the form of roughly 216,000 business and housing loans.

About the European Fund for Southeast Europe (EFSE)
The microfinance fund European Fund for Southeast Europe (EFSE) is aimed at fostering economic development and prosperity in Southeast Europe, including Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, FYR Macedonia, Georgia Kosovo, Moldova, Montenegro, Romania, Serbia and Ukraine. It offers long-term funding instruments to local financial institutions for on-lending loans to small business, in particular to micro and small enterprises (MSEs), as well as housing loans to low-income private households. The activities of EFSE are supported by the EFSE Development Facility, which provides funding for capacity building support to partner lending institutions, as well as awareness raising and market enabling activities. Initiated by KfW (The German Development Bank), the EFSE is a Public-Private Partnership that combines public funding and private investment. The investor base is comprised of donors and international financial institutions, including: European Commission, Federal German Ministry for Economic Development and Cooperation (BMZ), the governments of Austria, Switzerland, Denmark and Albania, KfW, IFC, FMO Netherlands Development Finance Company, European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB) and Oesterreichische Entwicklungsbank (OeEB). In addition, private investors such as Sal. Oppenheim and Deutsche Bank, contribute to the funding base. EFSE is a privately managed investment fund with Oppenheim Asset Management Services S.à r.l., Luxembourg, as the fund manager and Finance in Motion GmbH, Frankfurt/Main, Germany, as the fund advisor.

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