Raiffeisen Bank d.d. Bosnia & Hezegovina

not active

MIGA issued two guarantees totaling $8.3 million in coverage to Raiffeisen Zentralbank Österreich AG (RZB) of Austria for shareholder loans to Raiffeisen Bank d.d. Bosna i Hercegovina. The guarantees are for up to eight years and cover the risks of transfer restriction and expropriation. The shareholder loans will allow Raiffeisen to increase its lending in the country, bolstering the financial sector through the provision of both medium- and long-term financing. With two-thirds of its loan portfolio going to SMEs, the bank is helping these businesses obtain critical financing to start up and expand services, which in turn is playing an important role in strengthening the country's private sector. The retail portfolio is also having a significant impact, in that individuals are able to access credit that previously was not available to finish repairs to homes damaged by the war and make their first-ever purchases of houses and apartments. Raiffeisen Bank continues to play a crucial role in increasing the banking sector's competitiveness as a whole, which has resulted in a healthy and thriving financial system that is now trusted by once-wary customers who lost all their money with the collapse of state banks during and after the war. Raiffeisen's use of up-to-date banking technology is helping to increase processing automation and creating more customer-friendly cash management. RZB also has a state-of-the-art network for on- and off-site staff training, which is accessible to its subsidiary in Bosnia and Herzegovina. The World Bank Group's country assistance strategy for Bosnia and Herzegovina asserts that a more aggressive reform effort over the next several years is essential to creating sustainable growth. The key reform measures identified to ensure a private sector-led response include the promotion of new private activity through a transparent and predictable enabling environment, the transformation of outmoded socially owned productive capacities into operations that can stand on their own feet in open markets through privatization, and the reform of a dysfunctional and de-capitalized banking sector to ensure that productive activity can operate in efficient financial markets. MIGA's support of Raiffeisen Bank's latest expansion meets all three of these objectives.

High