MIGA has issued a guarantee of €71.25 million covering UniCredit Bank Austria AG’s (UBA) shareholder loan to its wholly owned subsidiary, AS “UniCredit Bank” (ASUB) in Latvia. The coverage is for a period of up to eight years against the risks of transfer restriction, expropriation, and war and civil disturbance.
UBA’s shareholder loan will enable the restructuring of ASUB’s operations, especially in their asset/liability management and structural liquidity. The loan is part of a broader funding strategy of the UniCredit Group to finance its subsidiaries and is particularly important in view of the current turmoil in financial markets worldwide, including Latvia.
MIGA supports this project in conjunction with the Financial Sector Initiative framework recently presented to MIGA’s Board of Directors as part of a coordinated international response to the ongoing global financial crisis. Latvia, like many other countries in the Europe and Central Asia region, is currently facing difficult fiscal adjustments along with the need for external financing. MIGA’s support to the project will supplement the International Monetary Fund’s stabilization program for Latvia.
This investment will also provide the needed funding to ASUB for continued support to its core client base. Corporate clients and SME’s of the ASUB’s loan portfolio are concentrated in the manufacturing, trade, real estate and financial services industries in Latvia. Continued financial support to these industries is critical to Latvia’s economic turnaround.
