MIGA and OTP to Boost Small Business Financing in Serbia

WASHINGTON, December 18, 2024 – The Multilateral Investment Guarantee Agency (MIGA), which houses the World Bank Group Guarantee Platform, issued a €50 million guarantee to OTP Bank Plc (OTP) of Hungary for its investment to OTP banka Srbija akcionarsko društvo Novi Sad (OTP Serbia) for three years. The guarantee will free up capital that OTP Serbia can then lend to local businesses. 

MIGA’s coverage will reduce the risk-weighting of mandatory reserves to zero at the consolidated group level, freeing up €59 million in additional capital. OTP, the largest banking group in Central and Eastern Europe region, will use the capital to enhance OTP Serbia’s capacity to finance small and medium-sized enterprises (SMEs). These businesses operate in key sectors such as wholesale and retail trade, manufacturing, agriculture, forestry, and construction.  

“The project underscores our commitment to supporting SMEs in emerging economies as drivers of growth and job creation,” said Hiroshi Matano, MIGA Executive Vice President. “By mitigating risks, our guarantee enables greater access to capital for SMEs, boosting investments that can accelerate Serbia’s economic resilience.”   

The financing aligns with the low-carbon, adaptation, and resilience goals of the Paris Agreement. The project is expected to generate employment, reduce social and economic inequalities, and promote growth across underserved regions of Serbia.  

“OTP Bank is proud to collaborate with MIGA on this guarantee, which aims to provide essential support to SMEs in Serbia. This initiative will foster growth and drive economic development for local businesses,” said Gyula Barabás, Managing Director of OTP Bank Plc and Chairmen of Supervisory Board of OTP Serbia. “Enhancing SMEs' access to finance is crucial for Serbia's sustainable and inclusive economic growth, as well as its integration into regional and global markets. This project will enable us to finance more SME clients in the coming years, further developing the sector.”  

The project aligns with the World Bank Group’s Serbia Country Partnership Framework for FY22-FY26 and complements the International Finance Corporation’s broader efforts in the financial sector. OTP has worked with IFC on a financing package for SMEs and climate-focused projects in Serbia, Bulgaria, and Croatia. Together, IFC and MIGA aim to leverage their unique instruments to improve private sector access and amplify project impacts.  

In Serbia, SMEs are the backbone of the economy, representing 99 percent of enterprises and 64 percent of employment. However, SMEs face significant financing challenges. Bank credit remains a primary financing source, with 52 percent of medium-sized firms using banks to finance working capital. A persistent financing gap, estimated at 12 percent of GDP, continues to limit their potential.  

Through this project, MIGA and OTP are helping bridge this gap, empowering SMEs to thrive and contribute to Serbia’s economic transformation.  In the next three years, OTP Serbia is expected to disburse around €119 million annually. 

About OTP 

OTP is one of the largest banking groups in CEE region with total assets of €105 billion as of end-3Q 2024, servicing almost 17 million clients in 11 markets with over 38 thousand full-time employees, 1,289 branches, 5,518 ATMs and increasing digital channels usage with more than 2 million mobile banking users. OTP offers the full range of banking and financial services including corporate, MSE and retail loans, leasing, as well as savings, transaction banking products and asset management services complemented by its subsidiaries. OTP also offers bank assurance products through the partnership with Groupama. As a systemic retail-focused player in Hungary, OTP is the market leader in the country with 32% market share by assets as of end-3Q 2024. OTP’s healthy retail business model, with profitability well above peers, has enabled the Bank to deploy the excess capital in establishing and growing its footprint in foreign markets. As such, OTP Group was able to acquire 25 banks in 12 countries since the early 2000s, out of which in terms of book value over €3.6 billion was acquired in total since 2016.  

OTP Serbia  

OTP Serbia is the second biggest bank in Serbia by assets and the leader on the local market in lending. As of year-end 2023, the bank’s assets increased by 12% YoY, reaching RSD 828,685 million (~$898 billion). This growth was strongly supported with deposit collection that covered loans growth and banks liquidity needs, as OTP Serbia maintained a stable market share of 17% in gross loans as of year-end 2023. The Bank’s profit after tax for FY2023 was RSD16,746 million, an increase of RSD5.9 billion from the previous year. This was achieved due to higher NIM followed by good performance in net fees and prudent level of spending and investment in bank development. 

OTP Serbia maintained CAR well above the minimum requirements, standing at 21.41% as of year-end 2023. Overall financial performance remains strong in 3Q2024, with NII growing 10% YoY as NIM increased further to 3.8%. 

About the World Bank Group Guarantee Platform    

Initiated in 2024, the World Bank Group Guarantee Platform consolidates all guarantee products and experts from across the World Bank Group institutions at MIGA. It provides a simplified and comprehensive menu of guarantee solutions, enabling clients to select the instrument that best suits their needs. The platform streamlines processes, removes redundancies, and provides greater accessibility by de-risking investments in developing countries. Its goal is to boost the WBG’s annual guarantee issuance to $20 billion by 2030.     

For more information about the guarantee platform, please visit: https://www.worldbank.org/wbgguarantees  

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Contact:    

In Washington: Elizabeth Howton, (202) 458-5922 or ehowton@worldbankgroup.org