MIGA Supports Lending to Small Businesses and Climate Financing
WASHINGTON, December 19, 2023 —The Multilateral Investment Guarantee Agency of the World Bank (MIGA) has increased its guarantees in Albania, North Macedonia, and Serbia. The capital optimization guarantees, totaling $233 million, free up more than $279 million to lend toward climate finance and small- and medium-sized enterprises (SMEs) and close the financing gap. The MIGA guarantees will help reduce greenhouse gas emissions, create jobs, and reignite economies dampened by the COVID-19 pandemic and Russia’s invasion of Ukraine.
“MIGA is pleased to support lending in Albania, North Macedonia, and Serbia during these economic uncertainties,” said Hiroshi Matano, Executive Vice President of MIGA. “MIGA’s capital optimization has proven to be an effective instrument to bring in private sector investments to emerging markets.”
MIGA’s capital optimization guarantees cover equity investments by multinational banks into their subsidiaries in MIGA member countries. The subsidiary banks are required to maintain cash reserves in the central banks of the respective countries. The guarantees protect against the risk of expropriation of those reserves and reduce their risk weighting, freeing up capital that the banks can then lend to individuals and businesses.
MIGA has increased its guarantee by €112 million ($123 million) for three years to cover investments by Raiffeisen Bank International AG (RBI) in its subsidiary in Albania, Raiffeisen Bank sh. a. The guarantee frees up new loan capacity of €140 million ($153 million), of which 6% is expected to be deployed toward climate-finance related projects. The MIGA guarantee helps promote private sector-led growth by closing the significant climate financing gap in Albania through increased access to finance. RBI is committed to growing its climate portfolio in the country and expanding its climate agenda globally.
“MIGA’s support to RBI has helped its Albanian subsidiary build resilience. The capital optimization has been an effective tool, widely deployed in the region, to alleviate constraints, like the central bank mandatory reserves, and provide support to the economy,” said Daniela Tsoneva, RBI’s Head of Funding and Intra-Group Business.
Russia’s invasion of Ukraine, rising commodity prices, surging inflation, and rising interest rates, and weakening growth outlook have worsened Albania’s post-COVID economic recovery. MIGA’s support to RBI has helped its subsidiaries build resilience. The capital optimization has been an effective tool, widely deployed in the region, to alleviate constraints, like the central bank mandatory reserves, and provide support to the economy.
North Macedonia and Serbia
MIGA has increased its guarantees to Nova Ljubljanska banka d.d., Ljubljana (NLB) of Slovenia covering equity investments in the bank’s subsidiaries in Serbia and North Macedonia.
The increases are for €62 million ($68 million) for five years in Serbia and €38 million ($42 million) for four years in North Macedonia. The guarantees enable NLB Group’s subsidiaries to increase loan capacity in the host countries, of which 83% is expected to be deployed toward SMEs, and 25% toward climate-finance-related projects. SMEs make up 99.8% of all firms and account for 69.5% of employment in the North Macedonian and Serbian economies. This positively impacts the SME and climate financing in the two markets and will have the potential to reduce greenhouse gas emissions and wider adoption of energy efficiency and climate adaptation measures in North Macedonia.
MIGA has been supporting NLB Group with its capital optimization product since June 2020. This is MIGA’s fourth transaction with NLB, complementing guarantees issued in FY20 and FY21. The previous project performance has been positive in both Serbia and North Macedonia.
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 $76 billion in guarantees across 123 developing countries, supporting more than 1,000 projects. Over the past decade, MIGA’s guarantees have generated more than 156,000 jobs in developing countries.
RBI regards Austria, where it is a leading corporate and investment bank, as well as Central and Eastern Europe (CEE) as its home market. 12 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 45,000 employees service 17.8 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 60.6 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 NLB Group
NLB Group, headquartered in Ljubljana, is the leading banking and financial group in Slovenia with exclusive strategic focus on selected countries in Southeastern Europe (SEE), its home region. It covers an area with a population of approximately 17 million people. In addition to NLB, a main entity in Slovenia, NLB Group comprises six subsidiary banks in SEE and several companies providing ancillary services (asset management, leasing, real estate management, etc.). The Group utilizes a universal banking model and supports its clients through retail, corporate and investment banking services, intertwining sustainability intensively into all its operations. On six out of seven markets where NLB Group operates, the market share of member banks exceeds 10% (by total assets).
Elizabeth Howton, (202) 458-5922 or email@example.com
For more information, please visit: https://www.miga.org