This summary covers a guarantee for UniCredit Bank Austria AG’s (UBA) €100 million shareholder loan to its subsidiary, UniCredit Bank Serbia JSC (UBSR). UBA has applied for a MIGA guarantee of up to $123.5 million for a period of up to five years against the risks of transfer restriction, expropriation, and war and civil disturbance.
The loan will provide UBSR with long-term liquidity and improve UBSR’s asset-liability management by matching assets and funding of similar maturities. The loan is part of a broader funding strategy of the UniCredit Group to finance its subsidiaries and is particularly important in view of the current turmoil in financial markets worldwide, including Serbia.
The project is a Category FI under MIGA’s environmental review procedures.
MIGA supports this project in conjunction with the Financial Sector Initiative framework recently presented to the Board as part of a coordinated international response to the ongoing global financial crisis. Serbia, like many other countries in the ECA region, is currently facing difficult fiscal adjustments along with the need for external financing. MIGA’s support to the project will supplement the IMF-negotiated program for Serbia by i) injecting liquidity into the UBSR, ii) boosting confidence in Serbia’s financial sector and iii) contributing to the improvement of the country’s financial stability.
One of the main objectives of the World Bank Group’s country partnership strategy for Serbia for 2008-2011 is to encourage dynamic private sector led growth. The proposed project is fully consistent with this objective.