Belarusian Bank for Small Business-Debt

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The proposed project is to establish a dedicated greenfield microfinance bank in Belarus during 2007. Potential co-financiers include EBRD, FMO, IFC and other IFIs. The project will support the development of private micro and small enterprises (‘MSEs’) in Belarus by providing financial services on a sustainable basis particularly in the regions outside of the capital. The proposed transaction comprises a EUR 2.5 million equity investment and a senior loan of up to EUR 10 million for on-lending to micro and small enterprises. The project is expected to have a high transition impact by contributing to the development of the MSE sector in Belarus and further demonstrating the viability of the MSE lending operations to other local banks. Financing micro and small-size enterprises (MSEs) is critical to the development of free entrepreneurship practices as this contributes to economic and political stability through sustained employment opportunities. MFBB will bridge the gap between the demand and supply for MSE finance by providing permanent and reliable access to MSEs. It will also set new standards in good corporate governance, promote competition in the microfinance sector and foster innovation and better standards in customer service and conduct of business which will have a positive effect on other market participants and result in better services to the final beneficiaries. Once established, MFBB will seek to become a universal commercial bank providing wide range of products to its target clients. It will strive to become a bank with a strong focus on MSE lending, including in the regions outside of the capital. MFBB will be managed by the Consultant who will be selected jointly by the potential shareholders via an international competitive tender. A founding equity investment of up to EUR 2.5 million representing up to 25% of total equity. A senior loan of EUR 10 million with maturity of up to five years for on-lending to MSEs. Up to EUR 35 million. MFBB will nominate a senior member of the management responsible for environmental issues, introduce EBRD Environmental Procedures for Local Banks into its credit appraisal procedures, implement them and train its credit officers on environmental and social risk management. The bank and all of its activities and operations shall also comply with Belarusian national environmental, health, safety and labour regulations and standards as well as with the Core Conventions of the International Labour Organisation related to child and forced labour and discrimination at work. MFBB shall submit to EBRD Annual Environmental Report in a format and contents satisfactory to the bank. Technical co-operation funds are sought to contribute to the bank’s institution building, including the training of local bank staff, and to support the acceleration of its regional expansion through the building up of an extensive network of branches and lending outlets. The governments of Austria, Japan and Norway have committed to EUR 1 million to support the establishment of MFBB during the first year of operations. n/a