MIGA has reinsured the Belgian Export Credit Agency’s (ONDD) coverage to KBC Bank NV for its shareholder loans to its subsidiary Absolut Bank in the Russian Federation. MIGA’s reinsurance for this investment is $120 million. The coverage is for a period up to 10 years against the risks of transfer restriction and expropriation.
KBC’s shareholder loan investment is helping Absolut Bank enhance and strengthen its liquidity, taking into consideration the liquidity constraints in both the Russian and global financial markets. It will also help Absolut Bank continue its activity throughout Russia.
MIGA’s support to ONDD is in accordance with MIGA’s mandate to cooperate with national entities of its member countries as stated in MIGA’s Convention. This will be the first time MIGA has provided reinsurance support to ONDD. MIGA’s reinsurance will free up ONDD’s capacity to facilitate further investments into Russia.
One of the main objectives of the World Bank Group’s country partnership strategy for the Russian Federation is to support the development of the country’s financial sector. The proposed project is consistent with this objective, as the project will support private investment in various sectors through the availability of credit at a time when it is becoming more constrained in the country and worldwide. In addition, given Absolut Bank’s strategic goal to continue to support its banking network operations regionally, the project will help promote private investment at the regional level outside of the two main urban areas of the country, an objective which is also consistent with the country partnership strategy.