MIGA Guarantees to Boost Lending to SMEs and Climate Projects in the Balkans

WASHINGTON, June 06, 2024 –The Multilateral Investment Guarantee Agency of the World Bank Group (MIGA) has issued three guarantees totaling €770 million to Raiffeisen Bank International AG (RBI) of Austria for its equity investments in its subsidiaries in Serbia, Bosnia and Herzegovina (BiH) and Kosovo. The guarantees will protect against the risk of expropriation of funds with respect to the mandatory reserves held at the central banks in the host countries for up to three years.   

RBI’s subsidiaries are mandated by local regulations to maintain a certain amount of cash at the local central banks as mandatory reserves, and MIGA guarantee frees up the capital to issue additional loans. The guarantee is expected to enable the three subsidiaries to generate loan capacity in the host countries by a total of around €900 million, of which 13% is expected to be deployed toward climate finance-related projects, and 27% toward small and medium enterprises (SMEs).  

The MIGA guarantee would free up new capacity for loan growth of by up to €596 million in Serbia, €175.8 million in BiH, and €146.8 million in Kosovo. RBI Serbia, RBI BiH, and RBI Kosovo are expected to deploy 12%, 6%, and 42% of the guarantee amount toward climate finance, respectively, and 27%, 6%, and 100% toward SMEs.   

"MIGA’s capital optimization has proven to be an effective tool to expand lending in our member countries," said Hiroshi Matano, MIGA Executive Vice President. "The guarantee has the potential to spur action on global issues such as climate change as part of the loans enabled by the MIGA guarantee."  

RBI’s continued focus and investments in SMEs and climate/green initiatives provides support to the host countries to promote private sector-led growth and progress on their climate agendas. In Serbia and BiH, SMEs are crucial for the economies, contributing to formal business employment and value addition, but they have limited access to credit. The MIGA guarantee will provide crucial credit line to SMEs.   

Access to credit in the Balkan countries has historically been low despite ample liquidity and hindered by regulatory constraints and adverse risk appetites from parent banks. The capital optimization product has been widely deployed in the region to alleviate such constraints and accelerate liquidity support in critically underserved segments of the economy.  

MIGA has been supporting RBI with its capital optimization product since 2015. The three guarantees will contribute to the resilience of the banking sector amid a weaker economic environment globally and regionally — underpinned by policy tightening, elevated inflation, relatively high energy costs, and other market disruptions due to Russia’s invasion of Ukraine. 

“We extend our gratitude to MIGA for their ongoing support,” said Daniela Tsoneva, Executive Director of Funding and Intra-Group Business at RBI. “Anticipated to maintain lending capacity in our subsidiaries across all three countries, MIGA's guarantees hold the promise of significant capital buffer. Given our steadfast commitment to environmental and social responsibility in all business endeavors, the inclusion of support for climate finance, SMEs, and gender considerations is of paramount importance to us.” 

About RBI 

Around 45,000 employees service 18.6 million customers through approx. 1,500 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 61.2 per cent 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. 

About MIGA 

MIGA was created in 1988 as a member of the World Bank 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 over $81 billion in guarantees across 123 developing countries, supporting more than 1,000 projects. Over the past decade, MIGA’s guarantees have helped provide new or improved electricity services to more than 78 million people. 

For more information, please visit: https://www.miga.org   

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Contact: 

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