Cacanska Banka - Equity Investment

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The proposed project is an equity investment in Cacanska Banka (CB) as the first step towards full privatisation through sale to a strategic investor in 3 to 4 years. EBRD’s investment will help CB to grow into a strong and larger regional bank through expansion of the branch network and introduction of new products, with a clear focus on SME financing. In addition, EBRD’s presence will be particularly important for the institutional strengthening of CB in preparation for full privatisation through the design and implementation of a comprehensive institution building plan, focusing on key areas as corporate governance, credit and risk management procedures, internal re-organisation and upgraded customer services. The main objective of the EBRD investment is the development of CB into a modern and efficient institution, capitalising on its regional focus and leading position in SME financing in one of the most active SME regions in Serbia. The proposed project is expected to contribute to the transition process of the Serbian banking sector and the overall development of the targeted region. The transition impact potential of the project is built around the following elements: CB is a regional bank based in Čačak, central Serbia, with primary focus on SME financing. CB is majority owned by the State, which directly and indirectly holds 60.3% of the bank’s capital. CB recorded total assets of EUR 41.7 million and equity of EUR 18.3 million as at end December 2005. Acquisition of up to 25% of CB’s capital by subscribing to newly issued shares. Screened FI. CB is required to implement EBRD’s Environmental Procedures for EBRD Intermediated Financing through Local Banks across all its operations, which include: (i) adherence to EBRD’s Environmental Exclusion & Referral Lists; (ii) compliance by sub-borrowers with the national environmental, health and safety legislation; (iii) reporting on any material damages and/or accidents associated with operation; and (iv) submission of Annual Environmental Reports to EBRD. As mentioned above, EBRD’s equity investment will be complemented by an institution building plan. EBRD is procuring donor funds for this programme. CB is currently benefiting from a technical assistance programme of EUR 640 thousand, funded by the European Agency for Reconstruction (EAR), for the implementation of an SME credit line under EBRD’s Western Balkans SME Finance Facility. Čacanska Banka a.d. 32000 Čačak - Pivarska 1 Tel: (+381) 32 302 203 Fax: (+381) 32 225 048 or 32 348 898 E-mail: office@cacanskabanka.co.yu