MIGA Supports Financing for Small Businesses and Climate in Montenegro and Kosovo
WASHINGTON DC, May 16, 2022 — MIGA has issued guarantees to Nova Ljubljanska banka d.d., Ljubljana (NLB) covering up to €41 million in support to NLB Banka AD Podgorica of Montenegro and NLB Banka Prishtina Sh.A. of Kosovo (Subsidiaries). The guarantees, lasting three years, cover against the risk of expropriation of excess cash reserves held at the subsidiaries’ central banks. This is the first time MIGA’s capital optimization product is being utilized to cover excess cash reserves and marks an innovative application of the product beyond coverage on mandatory reserves held with central banks.
Banks may hold excess cash reserves for precautionary purposes, and NLB’s subsidiaries are holding excess cash reserves in Kosovo and Montenegro as an additional liquidity buffer. MIGA’s guarantees will reduce the regulatory risk-weighting applied to these excess reserves on an NLB-wide consolidated basis, freeing up capital to provide financing to micro, small, and medium-sized enterprises (MSMEs) and for climate projects.
“This innovative use of capital optimization coverage for excess cash reserves will help unlock capital in support of MSMEs and climate projects in Kosovo and Montenegro,” MIGA Executive Vice President Hiroshi Matano said. “The enhanced lending capacity will help these economies as they take steps to recover from the impact of the COVID-19 pandemic.”
NLB’s subsidiaries in Montenegro and Kosovo are the second largest banks in their respective countries as measured by their respective percentages of market share by total assets. With MIGA’s guarantees, NLB Subsidiaries will contribute to the resilience of the MSMEs in their lending markets. They will also be able to pursue more robust greener financing activities.
“In NLB Group we are well aware that small and medium-sized businesses are the backbone of this region’s economy, that is why we support them not only with our services and our knowledge, but with various activities that intensively address also the environmental and sustainability role. We want to support companies that call this region their home, that operate locally or regionally, that create here and understand their social role as we in the NLB Group understand it and fulfil it. By doing so, we want to co-create better conditions for working and living in this region, and thus a better perspective for people to stay here,” explained NLB’s CEO Blaž Brodnjak.
NLB, a current MIGA client and guarantee holder, is a leading banking and financial group in Slovenia. As of December 31, 2021, NLB Group had 479 branches and 1.9 million active customers across six countries in Southeastern Europe.
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About NLB
NLB Group, headquartered in Ljubljana, is the leading banking and financial group in Slovenia with exclusive strategic focus on selected countries in Southeastern Europe (SEE), our home region. It covers an area with a population of approximately 17 million people. In addition to NLB, being main entity in Slovenia, NLB Group is comprised of seven subsidiary banks in SEE, several companies providing ancillary services (asset management, real estate management, leasing), and a limited number of non-core subsidiaries in a controlled wind-down. The Group has universal banking model and supports its clients through retail, corporate and investment banking services. On six out of seven markets where NLB Group operates, the market share of member banks exceeds 10 percent by total assets.
About MIGA
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war & civil disturbance; and offering credit enhancement to private investors and lenders.
Since its creation, MIGA has issued over $65 billion in guarantees across 120 developing countries.
Contacts
In Washington: Vamsee Krishna Kanchi, (202) 458-9771, vkanchi@worldbank.org
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