MIGA has issued Raiffeisen Zentralbank Österreich AG of Austria a $47.5 million guarantee covering its $50 million subordinated shareholder loan to ZAO Raiffeisenbank Austria (RBRU) of the Russian Federation. The guarantee is for a period of up to seven years and covers against the risks of transfer restriction and expropriation.
The shareholder loan will help to strengthen RBRU’s Tier II capital to allow the bank to continue growing its portfolio. RBRU offers a full range of services, including retail, corporate finance, and investment banking. In 2003, it was the first bank in the market to offer consumers unsecured multipurpose loans. That same year, its corporate credit portfolio grew by 52 percent.
This project supports a significant foreign player in a banking sector plagued by fundamental and structural weaknesses with few foreign investors. The presence of a bank like RBRU, with its governance, transparency, advanced risk management, and operational know-how, is key to the development of Russia’s banking sector. By supporting the expansion of RBRU’s high-quality services, this project will benefit consumers and have a demonstration effect on the financial sector. It also complements Russia’s country assistance strategy, which aims in part to increase effective financial intermediation and opportunities for the entry and growth of new firms.