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Project Brief

Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature. Environmental and Social Review Summaries are provided for projects assigned an Environmental Assessment Category of A or B.

 

Project name
Zagrebacka Banka d.d.
Project ID
8503
Fiscal year
2012
Status
Active
Guarantee holder
UniCredit Bank Austria AG
Investor country
Austria
Host country
Croatia
Environmental category
FI
Sector
Banking
Date SPG disclosed
June 11, 2012
Project Board date
June 26, 2012
Gross exposure
 $298.8 million
Project type
Non-SIP

View Summary of Proposed Guarantee


On June 29, 2012, MIGA issued a guarantee of $298.8 million to cover UniCredit Bank Austria AG’s (UBA) €250 million shareholder loan to its subsidiary, Zagrebačka Banka d.d. (ZABA) in Croatia. The coverage is for a period of up to three years against the risks of transfer restriction, expropriation, and war and civil disturbance.

The guarantee represents MIGA’s continued support to UBA in Croatia, as the agency covered UBA's two previous shareholder loans to ZABA of €200 million in 2009 and €280 million in 2010.

The purpose of this shareholder loan is to support the development of ZABA’s loan portfolio. Accordingly, UBA intends to use a part of the loan to improve ZABA’s structural liquidity ratio by lengthening the tenor of ZABA’s existing medium-term funding. The remaining amount is allocated to support new medium-term lending in the Croatian economy.

Several years after the global financial crisis, the state of Croatia’s economy remains delicate as a result of spillover effects from over-indebted neighboring euro-zone countries. This loan forms part of UBA’s continuing efforts to support ZABA during a time of economic contraction and uncertainty, strengthen ZABA’s balance sheet, and improve access to credit within the economy. Given ZABA’s size and systemic importance in the Croatian banking sector, these measures will play critical roles in increasing market liquidity and lending activity in the general economy.

One of the main objectives of the World Bank Group’s country partnership strategy for Croatia for 2009-2012 is to strengthen private sector-led growth and accelerate convergence with the European Union. The project is fully consistent with this objective.

From a regional perspective, MIGA’s support to this project forms part of the World Bank Group’s current two-year plan to actively bolster countries in emerging Europe and Central Asia that are impacted by the euro-zone crisis.

 
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