Nord/LB Lietuva Syndicated Loan

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US$ 15 million loan, comprising an A-loan for the EBRD’s account of US$ 5 million and a US$ 10 million B-loan syndicated to participating banks. Raiffeisen Zentralbank is the co-arranger together with EBRD. Funds will be used to finance the bank’s private sector clients. The objective of the project is to: The A/B loan structure has introduced LZUB to the international capital market. Moreover, the bank will be able to use scarce term funds to expand its support for private sector enterprises. Given recent developments in the banking sector, in particular increased concentration, the loan will introduce a new Lithuanian borrower to international investors and will help ensure competition in the sector. Lietuvos Zemes Ukio Bankas ( LZUB) is the third-largest bank in Lithuania. It has total assets (according to 30 June 1999 audited IAS accounts) of LTL 1.68 billion (US$ 417 million), which accounts for about 14 per cent of total banking assets in the country. LZUB’s shareholders’ funds were LTL 117 million (US$ 29.3 million) in Tier I equity at the end of the first half of 1999. Fitch IBCA recently awarded LZUB a BB- rating to reflect the efforts of management and owners to turn the bank around. LZUB is a universal bank, offering a full range of financial products, including short- and long-term deposits, short- and medium- to long-term loans, domestic and international payment services, trade credits and guarantees, brokerage services, insurance and leasing. The Government of Lithuania currently owns 87.6 per cent of the shares and has expressed the intention to launch the bank’s privatisation by the end of the year. A sale to a strategic/ financial investor is expected by mid-2000. The EBRD will provide a US$ 5 million, five-year loan with a 36-month grace period. The total project cost is US$ 15 million, comprising financing under an A/B-loan structure. The EBRD will underwrite up to US$ 5 million of direct exposure, with the balance syndicated among participant banks. Raiffeisen Zentralbank has underwritten US$ 2.5 million of the B-loan. This will have a term of 24 months, with a one-year extension at the option of participant banks. Additional nine commercial banks have participated in the syndication. LZUB will continue to follow the EBRD's Environmental Procedures for Intermediated Lending through Local Banks in all of its corporate lending operations. In implementing these procedures, LZUB will assess potential environmental issues associated with borrowers' operations, which are required to comply, at a minimum, with local/national health, safety, environmental and public consultation requirements. None.