EBRD to lend €50m to Belinvestbank ahead of privatisation

EBRD to lend €50m to Belinvestbank ahead of privatisation
By bne IntelliNews September 14, 2017

The European Bank for Reconstruction and Development (EBRD) will lend €50m to Belinvestbank to replenish its capital and move it towards an eventual privatisation, EBRD President Suma Chakrabarti told journalists on August 13.

The loan is part of a broader €200mn investment package the EBRD plans for the country in 2017, Sir Suma said at a press conference, slightly less than the record of €250mn invested in any one year by the EBRD. 

The EBRD has been encouraging the government to privatise Belinvestbank, plans that have been on the drawing board for years. The fresh capital, given to the bank by the EBRD in the form of a subordinate loan, is designed to move the bank in the direction of a privatisation. The EBRD signed off on a memorandum on the pre-privatisation preparation of the bank last time Sir Suma was in Minsk in May 2015.

“We had a meeting at Belinvestbank today. It was very productive. I was informed about progress and the changes secured as part of the institutional development program of the bank. We remain true to our commitments to get the bank ready for privatisation,” Sir Suma told journalists on August 12.

Belarus and the EBRD agreed in 2015 that the government would sell a controlling interest in Belinvestbank by 2020, with the EBRD acting as an advisor on the sale.

The documents signed during a visit by EBRD Sir Suma promote local currency lending and strengthen the domestic capital markets, which are shared priorities for the Belarusian authorities and the EBRD, the bank added.

"The country’s authorities are committed to facilitating access to affordable local currency funds for local private businesses," the EBRD said in a statement. "In order to achieve this goal they are promoting a macroeconomic, regulatory and market environment that supports the development of the local capital and money markets and local currency borrowing."

The signing also confirms the EBRD’s commitment to providing affordable loans to Belarusian banks, microfinance organisations and small businesses under the EBRD’s Local Currency Programme. It was established to mitigate the exposure of firms in EBRD countries of operations to exchange rate volatility and has been one of the development bank’s stand out successes.

The €500mn Programme combines the EBRD financing and donor resources to provide eligible borrowers with access to affordable funding. The EBRD already provided access to local currency to over 300,000 SMEs in the countries that are eligible under the Programme.

The EBRD and Belarus agreed to select the state-owned road-management holding road construction conglomerate Belavtodor for the implementation of a pilot project to introduce a corporate-governance action plan.

Sir Suma was in Minsk to reaffirm the bank’s commitment to Belarus, but said that it has no plans to change its strategy, and its involvement in the country remains muted due to the government’s slow pace of reforms. The EBRD has been in Minsk for 25 years over which time it has invested a total of €2bn into the country's economy. 

A new country strategy for Belarus was adopted in September last year. “It enables us to interact more extensively in a number of areas in various sectors in Belarus. The range of potential projects is now much wider than ever before in the history of the EBRD. It is connected with several factors including the improving macroeconomic conditions in the country: for the first time in several years the country has recorded macroeconomic growth. The resolution of some issues with Russia has had a favorable impact on the economic situation affects as well," Sir Suma said.