AikBank Serbia Mandatory Reserves Coverage

Project description

On December 19, 2025, MIGA issued a guarantee of EUR 344.4 million to AIKGROUP (CY) LIMITED (AikGroup) domiciled in Cyprus, for a period of up to 3 years covering the risk of expropriation of the mandatory reserves held by its subsidiary in Serbia, AikBank akcionarsko društvo Beograd (AikBank Serbia), at the National Bank of Serbia. The MIGA guarantee is expected to provide regulatory capital relief to AikGroup on a consolidated level by reducing the amount of Risk Weighted Assets (RWAs). 

AikGroup is one of the largest banking and financial services groups in the Southeastern Europe region. Its subsidiary banks outside of Cyprus are required to maintain reserves at the central banks in their respective jurisdictions. Mandatory reserves in AikBank Serbia contribute to AikGroup’s overall RWA at the consolidated level, resulting in less headroom for other productive assets for a given level of capital.

Environmental Categorization 

AikBank Serbia provides financial products and services to individuals, small and medium enterprises (SMEs), and corporates in Serbia. The MIGA guarantee will support lending for climate, micro, small and medium enterprises (MSMEs) and underserved populations.  These transactions are mostly considered to have limited environmental and social (E&S) risks or impacts that are generally site-specific, reversible, and can be managed through mitigation measures. Transactions or projects with significant adverse E&S risks and impacts are expected to be limited. The project has thus been categorized as FI-2 in accordance with MIGA’s Policy on Environmental and Social Sustainability (2013). 

The main E&S risks of this project relate to AikBank Serbia’s ability to identify, assess, and manage the E&S risks and impacts associated with its lending activities and the management of labor matters. MIGA analyzed the bank’s portfolio for types of transactions, tenor, size, industry sectors, and exposure to MIGA’s Exclusion List. MIGA also analyzed the bank’s E&S risk management procedures in line with the requirements of Performance Standard 1: Assessment and Management of Environmental and Social Risks and Impacts(PS1), and the bank’s labor practices in line with the requirements of Performance Standard 2: Labor and Working Conditions (PS2). 

The applicable E&S requirements for lending portfolio for this project will be: (i) MIGA Exclusion List; (ii) applicable E&S laws in Serbia; and (iii) the Performance Standards (for eligible corporate transactions).

As of December 2024, AikBank Serbia’s portfolio included the following business segments – corporate finance 27.7%, retail/consumer lending 25.8%, financial intermediaries 17.8%, small and medium enterprises 16.5% and project finance 12.2%. The financed sectors include finance and insurance, wholesale and retail trade, manufacturing, real estate, transportation and storage, construction, information and communications and mining and quarrying. Aikbank Serbia has limited exposure to activities on the MIGA Exclusion List, coal-related projects and oil and gas. 

In relation to E&S risk management, AikBank Serbia has an E&S Management System (ESMS) for assessing E&S risks and impacts associated with the bank’s lending activities. Initially primarily focused on risk assessments for SME transactions, the ESMS has been upgraded to include E&S risk assessments for corporate clients and the application of the Performance Standards. For the MIGA guarantee, AikBank Serbia will screen transactions against the MIGA Exclusion List, applicable E&S laws in Serbia and the Performance Standards (for eligible corporate loans), and also implement an external communication mechanism for receiving and addressing E&S concerns about the projects it finances from third parties, in line with PS1. 

AikBank Serbia has emergency response procedures in place which meet the requirements of PS1. In addition, the banks’ labor practices are also in line with PS2. Amongst other aspects, the bank has policies and procedures that address terms of employment, grievance management, performance management and remuneration, benefits, non-discrimination and harassment.

AikBank Serbia will report periodically to MIGA on its portfolio, the implementation of the E&S procedures, and on its labor practices.

Development Impact

The aim of MIGA’s guarantee is to help AikGroup reduce the risk-weighting of some of its assets, which would lead to a reduction in AikGroup’s Risk-Weighted Assets (RWA) on a consolidated basis. As reserves held by the National Bank of Serbia attract lower risk weights as a result of the MIGA guarantee, the RWA capacity that is freed up is expected to support AikBank Serbia’s lending operations in key development areas such as climate activities, MSMEs including women-MSMEs, as well as underserved populations, and demonstrate the importance of adopting inclusive business models.

MSMEs are the backbone of the Serbian economy, contributing to value addition, and accounting for two thirds of formal business sector employment. Despite their critical role, MSMEs continue to face significant constraints to accessing finance in the country. Although financing for climate-focused projects is rising steadily, private sector participation in climate action financing remains limited. Therefore, this Project is expected to support increased access to finance for MSMEs, climate initiatives, as well as other underserved populations, and enhance the overall contribution of these segments to the Serbian economy.

The Project is aligned with the World Bank Group’s Country Partnership Framework (CPF) FY22-26, focused on expanding lending for greener investments and transition to low-carbon and resilient economy, and improving business environment and regional integration, including activities to spur MSME and rural development. The Project is also aligned with MIGA’s FY24-26 Strategy and Business Outlook under its strategic direction of addressing the global challenge of climate change by supporting climate finance lending and ensuring inclusive growth by supporting underserved groups, namely MSMEs including WMSMEs, in rural and underdeveloped regions, the youth, and seniors.