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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
Eurobank AD Beograd – Central Bank Mandatory Reserves Coverage
Project ID
Fiscal year
Guarantee holder
Eurobank Ergasias S.A.
Investor country
Host country
Environmental category
Date SPG disclosed
February 07, 2013
Project Board date
February 26, 2013
Gross exposure
 $250.1 million
Project type

View Summary of Proposed Guarantee

On March 1, 2013, MIGA issued a guarantee totaling €190.0 million ($247.4 million equivalent) covering an investment by Eurobank Ergasias S.A. (Eurobank) of Greece in its Serbian subsidiary, Eurobank AD Beograd. The coverage is for a period of three years against the risk of expropriation of funds for mandatory reserves held by the subsidiary in the central bank of its jurisdiction.

Eurobank is a universal banking group with a significant network of retail banks across Central, Eastern and Southeastern Europe. The group’s subsidiary banks are required to maintain mandatory reserves at the central banks of their respective jurisdictions, generally based on the volume of customer deposits that these subsidiaries hold. The banks are thereby exposed to the risk of expropriation of funds by the respective central bank. This exposure leads to higher risk weights on these assets at the consolidated level, resulting in increased capital allocation for country risk exposure. At the consolidated group level, the risk weighting determines the amount of equity required to maintain a specified capital adequacy ratio (CAR) in accordance with Greek banking law.

MIGA’s guarantee will help Eurobank obtain capital relief from the CAR requirements. By obtaining MIGA’s insurance against the risk of expropriation of funds, the risk weighting for mandatory reserves held at the central bank can be reduced. This will free up equity tied up for country risk purposes, which can be deployed to support its subsidiary’s franchise in Serbia. Eurobank Beograd’s role in supporting productive businesses, including small and medium enterprises, through credit extension helps stimulate growth, employment generation, and—ultimately—poverty reduction in Serbia.

As a participant of the European Bank Coordination Initiative (also known as the Vienna initiative), Eurobank pledged to support its Serbian subsidiary, keeping it well capitalized. Eurobank’s continuing support for its systemically important subsidiary contributed to supporting the Serbian economy in the aftermath of the financial crisis. Capital adequacy well in excess of the regulatory requirement provides Eurobank Beograd in Serbia with a cushion to withstand potential shocks and helps position the bank for future growth.

MIGA’s coverage to Eurobank is consistent with the goals of the crisis response initiative for the ECA region launched by the World Bank Group in January 2012. As part of the initiative, MIGA seeks to support capital-constrained banks active in the region. The project is also aligned with the World Bank Group’s strategy for Serbia as it seeks to address the spillover from the financial crisis.

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