Siauliu Bankas Third Capital Increase

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The proposed project is an equity investment in Siauliu Bankas (SB), the sixth largest Lithuanian bank in terms of assets and an important provider of banking services to Lithuanian small and medium sized enterprises (SMEs). SB is based in Siauliai in the north of the country, and in recent years has rapidly grown its operations. It now has a network of 43 branches in all regions of Lithuania. The EBRD will participate in a capital increase which will result in a minority stake of 16%. The investment by EBRD will provide the capital and support to continue the expansion of SB, transforming it into a strong national bank focusing on SME finance. The Project represents an important next step in EBRD’s relationship with SB to date. As a lender, and through a technical co-operation programme, over the last four years, the Bank has helped SB develop as an active regional bank, by expanding its services for small businesses. Through good customer service and close co-operation with clients, SB has been able to meet the needs of many small companies in the Siauliai area. EBRD now intends to participate in the next stage in this process, as SB seeks to export its business model of serving SME’s to other regions of Lithuania. EBRD will therefore provide capital and active support to realise the full growth potential of the bank. In doing so, EBRD will enable SB to reach out to more small businesses, particularly in rural areas. This should have positive effect on the development of the SME economy in Lithuania. Second, the introduction of EBRD as a shareholder will promote good corporate governance standards in this bank including fostering of transparency, accountability and responsibility amongst the shareholders, Bank Council members, managers and employees. Third, the EBRD’s experience in many previous equity investments and in transition will be shared with SB and this co-operation should positively contribute to the growth and development of SB. AB Siauliu Bankas (SB) is the sixth largest bank in Lithuania with total assets of EUR 204 million and equity of EUR 19.5 million. SB is rated B+ (stable) by Fitch IBCA. Equity EUR 6.71 million Screened FI. SB is familiar with EBRD’s environmental requirements from earlier operations with the Bank including the SME credit line. The Bank provided SB with Environmental Due Diligence Training in March 2001, Project monitoring based on annual environmental reports from SB to the Bank has shown that SB has satisfactorily adopted and implemented the EBRD Environmental Procedures for Small and Micro Loans. SB has also participated in financing environmental improvement projects through its co-operation with the Lithuanian Environment Protection Investment Fund. In the context of this Project, SB will have to apply EBRD’s Environmental Procedures for Local Banks to the full range of its commercial lending activities, including compliance with EBRD’s Exclusion and Referral List, providing annual environmental reports of all its lending activities to EBRD and requiring all its borrowers to comply, at a minimum, with Lithuania health, safety, environmental and public consultation requirements. Technical assistance funding was provided during 2001 and 2002, with the support of the European Union PHARE programme, to assist the implementation of the SME credit line provided by EBRD and upgrade Siauliu Bankas’ SME lending capabilities. Mr Donatas Savickas, Member of the Board, Deputy Chairman of the Board 149 Tilžės Street Siauliai LT-76348 Lithuania Telephone: +370 41 595 602 Fax: +370 41 430 774 Email: d.savickas@sb.lt Website: http://www.sb.lt