MIGA Supports Expansion of MSME Financing in Serbia
WASHINGTON, March 31, 2025 – The Multilateral Investment Guarantee Agency (MIGA), which houses the World Bank Group Guarantee Platform, issued a guarantee of €161.5 million to Erste Group from Austria to cover its investments in Erste Bank akcionarsko drustvo Novi Sad (Erste Serbia), a Serbian subsidiary. The guarantee covers against the risk of expropriation of funds of mandatory reserves held at the National Bank of Serbia for up to five years.
The project marks MIGA’s first capital optimization initiative with Erste, one of the largest banking groups in the Central and Eastern Europe region. MIGA’s coverage will reduce the risk weighting of mandatory reserves to zero, providing risk-weighted asset relief and enabling approximately €122.6 million in new financing. Erste Group will redeploy these funds to finance eligible micro enterprises (MEs) and small and medium-sized enterprises (SMEs).
“This project demonstrates the power of innovative financial solutions in strengthening access to micro, small, and medium-sized enterprises,” said Hiroshi Matano, MIGA Executive Vice President. “MIGA’s guarantee will facilitate Erste to expand its support for MSMEs, igniting economic growth and job creation in Serbia.”
The project aligns with the World Bank Group’s priorities in Serbia and supports broader efforts to advance economic development by strengthening the financial sector and expanding MSME access to financing. The project contributes to private sector-led growth and is in line with the strategic objectives of the Serbia Country Partnership Framework for FY22-FY26.
The project also complements IFC’s efforts to support MSMEs and climate finance in Serbia. In April 2024, IFC provided a €65 million financing package to Erste Serbia, specifically allocated for MSMEs and climate finance initiatives. IFC and MIGA will leverage their respective instruments and strengths to improve private sector access to finance and amplify their impact on a critical sector of the Serbian economy. Expanding MSME financing can drive economic dynamism, innovation, and create jobs. Increased competition in MSME lending and credit supply will enable businesses to capitalize on growth opportunities, enhance productivity, and contribute more effectively to economic development.
“We thank MIGA for its continued support, through which we expect to expand the lending capacity of our subsidiary in Serbia, utilizing a significant capital relief provided by the MIGA guarantee,” said Attila Santa, Head of Group Balance Sheet Management at Erste Group. “Given Erste Group's and Erste Bank Serbia's commitment to contribute to the local economic development, the facilitation of local SMEs’ access to finance, as well as climate finance, is of essential importance to us.”
MSMEs play a key role in Serbia’s economy, representing 99% of all enterprises and 64% of employment. Bank credit is a primary source of finance for MSMEs, with 49 percent of small-sized firms using banks to finance capital. However, MSMEs remain underserved by the traditional banking sector and struggle with a persistent financing gap that is estimated to be 12% of GDP.
About Erste Serbia
Erste Serbia is the oldest financial institution in Serbia, founded in 1864 as the first savings bank (Novosadska Stedionica). In 2005, it became a member of the Erste Group. Erste Serbia is among the ten largest banks in Serbia with market share of 6.3 percent in terms of total assets. As of year-end 2023, Erste Serbia’s total assets and total gross loans to customers increased by 7.6 percent and 6.3 percent, respectively year-on-year. Erste Serbia aims to grow its loan portfolio at around 11.7 percent in compound annual growth rate between FY25 to FY29, which is above private credit growth that is projected to grow at 8.6 percent, and above the average nominal GDP growth of 7.6 percent. Erste Serbia aims to expand lending to MSMEs to achieve €1 billion in loans outstanding. To achieve this goal, Erste Serbia plans to implement digital lending and process automation, and strengthen customer relationship management to better serve its MSME clients.
About the World Bank Group Guarantee Platform
Initiated in 2024, the World Bank Group Guarantee Platform consolidates guarantee products and experts from across the World Bank Group 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 World Bank Group’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