EBRD Press Release – ProCredit Bank Serbia receives €15 million boost

ProCredit Bank Serbia is receiving a €15 million loan from the EBRD to help meet the growing needs of local entrepreneurs and farmers in Serbia and Montenegro . The loan, which is being syndicated to Cordiant – IFPT 2004 (€3.5 million), ASN-Novib Fund (€3 million) and ING Wholesale Banking (€2.5million), is the first loan to be syndicated to a microfinance institution in Serbia .

PCB Serbia is the only commercial bank in Serbia focused entirely on lending to micro and small enterprises, and already supports more than 27,000 entrepreneurs. New and existing clients can receive loans through any of ProCredit’s 28 branches in Belgrade , Kraljevo, Krusevac, Pirot, Novi Pazar, Vranje, Becej, Prjepolije, Nis and Subotica .

Chikako Kuno, Director of the EBRD’s Group for Small Business, said micro and small businesses are critical for economic development and for increasing employment opportunities, yet they often lack access to finance. This latest loan will help overcome this hurdle. The role entrepreneurs play in promoting the transition towards a market economy cannot be under-estimated, and this is why we pay so much attention to this sector, she added.

Established in 2001, PCB Serbia is owned by the EBRD, Commerzbank AG, Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO), the International Finance Corporation (IFC), Kreditanstalt für Wiederaufbau (KfW) and ProCredit Holding AG. It received technical assistance funds from the US Government via the US/EBRD SME Financing Facility, and from FMO and KfW for institution building and training loan officers. It was the first bank in the country to receive a Fitch Rating (B/B+).

Doerte Weidig, General Manager of ProCredit Bank, said: “This loan will help address the prevailing high demand for micro and small business and agricultural loans. Moreover, the participation of commercial partners like Cordiant, ING Wholesale Bank and ASN-Novib Fund proves that PCB Serbia has been successful in diversifying its refinancing sources as well as in reducing its reliance on funding from international financial institutions.”

The bank provides micro loans for up to €10,000 with a maturity of up to two years, while small loans reach up to €250,000 with a maturity of up to five years. All loans are provided on a commercial basis. Through its leasing subsidiary, it is also becoming a leader in agricultural lending in the region. It disburses farmer’s loans (up to €10,000 for a maximum three-year maturity) for the acquisition of seeds, fertilizers and animals as well as loans for the rural sector (up to €50,000 for a maximum five-year maturity) for purchasing agricultural equipment, machinery and land.

So far, roughly a third of loans disbursed in 2005 have been granted to entrepreneurs operating in the agricultural sector. It is particularly in this sector where high demand for micro and small loans has not yet been met. PCB Serbia plans to expand its network and train staff to reach this untapped market segment. The loan to PCB will foster its role in agricultural lending and hence diversify products available to micro and small businesses in the Serbian financial sector.