MIGA Bolsters Raiffeisen Bank’s Lending in Bosnia & Herzegovina and Serbia
Washington, Dec. 23, 2022 – The Multilateral Investment Guarantee Agency (MIGA) signed additional guarantees of up to €480 million (approximately $509 million) with Austria-based Raiffeisen Bank International AG (RBI) to cover equity investments in its subsidiaries in Bosnia & Herzegovina and Serbia.
The guarantees will allow a key lending institution in the region to optimize its existing capital at a time of economic stress and uncertainties, enabling the subsidiaries to expand local lending – stimulating economic growth, supporting job preservation and creation, and ultimately contributing to reduced poverty and greater shared prosperity in the two nations.
MIGA’s capital optimization instrument will insure against the risk of expropriation of reserves that the RBI subsidiaries hold in the two nations’ central banks. This reduces the regulatory risk-weighting, which will enable additional lending.
The guarantees increase MIGA’s existing coverage of RBI mandatory reserves in Bosnia and Serbia. In addition, MIGA signed a new guarantee covering excess reserves held by the Bosnian subsidiary. This collaboration is a continuation of MIGA’s long-standing relationship with RBI which goes back to 2003, with the first capital optimization insurance being issued in 2015 in support of its operations in five subsidiaries in the Central, Eastern, and Southeastern Europe region.
A portion of the newly enabled loans will be earmarked for additional climate finance lending and new lending to small and medium enterprises. In addition, MIGA has for the first time engaged with RBI Group on gender and developed a Gender Action Plan with the Bosnian subsidiary to support gender equality.
“Increasing MIGA’s existing guarantees for RBI in Bosnia & Herzegovina and Serbia will support access to credit and economic activity at a time when ongoing conflict in the region and other headwinds to growth threaten the welfare of these nations’ residents,” said Hiroshi Matano, Executive Vice President of MIGA. “MIGA is proud to extend and expand its almost two-decade partnership with RBI in supporting growth and prosperity in Eastern Europe.”
Shocks stemming from the war in Ukraine, rising commodity prices, surging inflation and interest rates, and a weakening economic outlook, in addition to the lingering impact of the COVID pandemic, have put pressure on banks in the region to deleverage and decelerate loan growth. These factors only exacerbate already low access to credit in Balkan nations.
MIGA’s capital optimization product has been an effective and widely deployed tool used to counter these factors in the region for several years, helping to alleviate lending constraints and accelerate liquidity in critically underserved segments of these nations’ economies, including small and medium enterprises, climate, and gender.
“We are thankful to MIGA for their continuous support and for showing solidarity at a time of continued pressure,” said Sabine Abfalter, CFO of RBI. “MIGA’s guarantees are expected to free up significant additional lending capacity at our subsidiaries in both countries. Since we always care about environmental and social impact of our business activity, the embedded support for climate finance, SME’s and gender is particularly important.”
About Raiffeisen Bank International AG
RBI regards Austria, where it is a leading corporate and investment bank, as well as Central and Eastern Europe (CEE), as its home market. Twelve markets of the region are covered by subsidiary banks. Additionally, the RBI Group comprises numerous other financial service providers, for instance in leasing, asset management, or M&A.
Around 44,000 employees service more than 17 million customers through approximately 1,700 business outlets, by far the largest part thereof in CEE. RBI's shares are listed on the Vienna Stock Exchange. The Austrian regional Raiffeisen banks own around 58.8 percent of the shares; the remainder is in free float. Within the Austrian Raiffeisen Banking Group, RBI is the central institute of the regional Raiffeisen banks and other affiliated credit institutions.
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping to mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war and civil disturbance; and offering credit enhancement to private investors and lenders.
Since its creation, MIGA has issued nearly $70 billion in guarantees across 122 developing countries in support of nearly 1,000 projects.
Elizabeth Howton, (202) 458-5922, email@example.com
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