US/EBRD SME - PROCREDIT BANK BOSNIA

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Micro Enterprise Bank (MEB) is a specialist micro and small enterprise finance institution to be established with its Head Office in Sarajevo. MEB's initial capital of DM 3.5 million (ECU 1.8 million) will be provided by the EBRD, the International Finance Corporation (IFC) and other interested organisations. The European Commission is to provide a total of ECU 7.5 million of funding for on-lending and technical cooperation. MEB's three principal objectives are: (i) the provision of financing to private micro and small enterprises (MSEs) in Bosnia and Herzegovina which currently face financing constraints, with a credit requirement typically between DM 2,000 and DM 50,000; (ii) assistance in the deepening of the country's financial system by developing sound micro and small lending techniques and demonstrating to the local banks that micro and small lending operations can be developed into a profitable activity; and (iii) the creation of a sustainable financial intermediary, which in the long run will be managed and owned exclusively by residents of Bosnia and Herzegovina. MEB will assist in the transition in Bosnia and Herzegovina from unemployment and dependency on humanitarian aid to employment and independence. The establishment and institutional strengthening of MEB will support the emergence of a private sector in the country by offering tailored loan facilities for MSEs. There will be a strong demonstration effect within the financial sector since currently no financial institution is supplying credit to MSEs. MEB should serve to stimulate competition, improving efficiency and ensuring that this credit demand is satisfied. Micro Enterprise Bank (MEB) is a specialist micro and small enterprise finance institution to be established with its Head Office in Sarajevo. MEB's initial capital of DM 3.5 million (ECU 1.8 million) will be provided by the EBRD, the International Finance Corporation (IFC) and other interested organisations. The European Commission is to provide a total of ECU 7.5 million of funding for on-lending and technical cooperation. The EBRD is proposing to invest DM 1 million (ECU 515,000) in MEB's initial share capital. MEB's total equity will amount to DM 3.5 million (ECU 1.8 million). MEB will carry out its operations in accordance with the EBRD's Environmental Procedures for Small and Micro Loans. In implementing these procedures, MEB will require its borrowers to comply with national /local health and safety, environmental and public consultation requirements. MEB will submit annual environmental reports to the EBRD. None