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WASHINGTON, D.C., Dec. 21 -- The International Finance Corporation (IFC) today approved an investment of up to DM2.1 million (US$1.5 million equivalent) in Trscanska Stedionica - Banka D.D., a new joint venture commercial bank based in Zagreb. Croatia's undercapitalized banking system is unable to fully serve the needs of the country's recently privatized enterprises and rapidly evolving business environment. To address these weaknesses, Trscanska Stedionica - Banka will provide a range of banking services, including foreign exchange, clearing, collection and payment services, and credit card operations. The bank is expected to begin operations in the first half of 1996. The bank will initially be capitalized at DM15 million (US$10.8 million equivalent). The other shareholders in Trscanska Stedionica - Banka will include Cassa di Risparmio di Trieste Banca S.P.A., Simest S.P.A., and Finest S.P.A., and twelve local Croatian enterprises. Cassa di Risparmio di Trieste, an Italian bank with offices in Slovenia, Hungary, and the Czech Republic, is Trscanska Stedionica - Banka's principal investor and will provide management and business support. "The establishment of Trscanska Stedionica - Banka is a positive signal to foreign investors and a vote of confidence in Croatia's transition to peace and a market economy," said Edward Nassim, Director of IFC's Europe Department. "IFC considers the participation of foreign banks in Croatia's banking sector to be critical for increased competition and efficiency in financial services." Croatia became a member of the World Bank and IFC in February 1993. IFC has financed projects in Croatia the pulp and paper and natural gas sectors during the 1970s, when the country was a part of former Yugoslavia. IFC, a member of the World Bank Group, is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
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