By Ivan Anderzhanov in Moscow
The Austrian banking group Raiffeisen International said today it has agreed with the European Bank for Reconstruction and Development on the terms of €150m in subordinated loans for its subsidaries in Ukraine, Russia and Romania.
"The aim of the subordinated credits is to strengthen the capitalization of Raiffeisen International's network banks in order to support their lending to enterprises," according to a Raiffeisen statement.
Ukraine, Russia and Romania are the three markets of Raiffeisen International's 17 Central and Eastern European markets hardest hit by the global economic and financial crisis.
Raiffeisen's Ukrainian unit, Bank Aval, will receive €100m in subordinated loans, while €25m be made available to Raiffeisen in Romania and €25m to Raiffeisen in Russia.
EBRD President Thomas Mirow said he provision of loans is to help ensure functioning financial sectors in Eastern Europe. "Maintaining the stability of the banking sector is a crucial component of the response to the international crisis," he said, in a statement.
The funding offered by the EBRD is part of a co-ordinated package for Raiffeisen International, with contributions also from the European Investment Bank and the World Bank Group, totalling total of €1bn.
So far this year, the EBRD has committed over €2.2bn to the financial sector in the countries where it invests. As a result of increased demand for the Bank’s assistance, the EBRD is raising the level of its overall investments to up to €8bn this year.
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