RBI Central Bank Mandatory Reserves Coverage
On March 30, 2015, MIGA issued a guarantee of €142.5 million ($153 million equivalent) covering equity investments by Raiffeisen Bank International AG (RBI) in its subsidiary in Serbia, Raiffeisen banka a.d. (Raiffeisen Serbia). The coverage is for a period of up to three years against the risk of expropriation of funds.[i]
MIGA’s guarantee will help RBI obtain relief from the capital adequacy requirements by reducing the risk weighting for the mandatory reserves maintained by RBI’s subsidiary in Serbia. This will free up equity tied up for country risk purposes and allow RBI’s subsidiary to extend more credit that will stimulate growth, generate employment, and reduce poverty in the country.
MIGA’s coverage to RBI is consistent with the goals of the crisis response initiative for the Europe and Central Asia region launched by the World Bank Group in January 2012. As part of the initiative, MIGA seeks to support capital-constrained banks active in the region. The project is also aligned with the World Bank Group’s strategy for Serbia, as the country seeks to address the spillover from the financial crisis.
[i] The guarantee was cancelled on March 30, 2018.