This summary covers a shareholder loan of $50 million from Raiffeisen Zentralbank Österreich A.G. in Austria to its subsidiary Raiffeisen Leasing d.o.o. Sarajevo (RLBH) in Bosnia and Herzegovina. The purpose of this loan is to fund the growth of RLBHs leasing portfolio. MIGA has been asked to provide coverage for 95 percent of the shareholder loan. The requested coverage is for up to six years against the risks of transfer restriction and expropriation of funds.
RLBH leases vehicles, including cars, trucks and trailers, various types of equipment, including processing, packaging and construction equipment, as well as leasing of industrial and office buildings. Loan proceeds are expected to be used to increase vehicle leases to micro and small-size enterprises and car leases to individuals.
The project is a Category C under MIGAs environmental review procedures. None of MIGAs issue-specific environmental and social safeguards are applicable to this project.
This project is expected to contribute to the development of the financial sector in Bosnia and Herzegovina by improving access to finance, particularly to segments of the economy that are currently underserved.
The shareholder loan will allow RLBH to increase its funding volume and grow its portfolio, thereby contributing towards the continued development and strengthening of the countrys leasing sector. The leasing sector in Bosnia and Herzegovina is still relatively small compared to West European countries. Small and medium-size enterprises (SMEs) are especially expected to benefit from the development of leasing in the country, as they often do not qualify for bank financing and lack the capital to purchase fixed assets to grow their businesses. SMEs and corporates account for 94 percent of RLBHs leasing volume, as of September 2007.
MIGAs support for this investment is aligned with the World Bank Groups country assistance strategy in Bosnia and Herzegovina, particularly with regard to supporting the development of a competitive private sector.
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--Modified on: May 30, 2008--