* Loan Will Also Boost Local Small and Medium Enterprises
Washington D.C., 11 June, 2002
—The International Finance Corporation, the private sector development arm of the World Bank Group, has signed an agreement to provide a pre-privatization loan of EUR 9 million to Croatia Banka, a medium-sized Croatian bank, to help support its portfolio growth in preparation for eventual privatization.
The loan, which has an eight year tenor, will provide the Bank with access to long-term financing, which it can on-lend to local small and medium enterprises. Mr. Khosrow Zamani, IFC’s Director for Southern Europe and Central Asia, said: “The loan will help serve two key strategic goals for IFC: it will support Croatia’s bank privatization efforts and increase access to long-term finance for small and medium enterprises.”
“Croatia Banka is a prime candidate for privatization because of its strong branch network and significant potential for growth,” Mr. Zamani said. “Croatia needs strong banks that can offer long-term finance to small and medium enterprises, which are currently underserved. Small and medium enterprises are a critical engine of economic growth,” Mr. Zamani said.
Croatia Banka, originally founded as a private bank in 1990, emerged as a successful bank in the 1990’s with a branch network that covered all of Croatia and a strong portfolio of small and medium enterprise loans. In the late 1990s, the bank – like many of its competitors – faced portfolio problems due to Croatia’s deteriorating economy and the civil war. Due to these problems, in September 1999, the bank was taken over by the state and its non-performing loans replaced with government bonds. Today, the bank has 25 branches and 320 employees and is one of the few banks with a countrywide network of branches.
Mr. Vedran Kuis, chief executive of Croatia Banka, said: “We are committed to using the IFC loan to create a strong portfolio of small and medium enterprise loans, thus preparing Croatia Banka for privatization. We look forward to returning the bank to its former position of strength as a leading private bank.”
Croatia Banka, which is headquartered in Zagreb, is currently owned by the State Agency for Deposit Insurance and the Bank Rehabilitation Agency, which plans to administer the privatization of the bank. Croatia Banka currently has total assets of EUR 190 million.
IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. Since its founding in 1956 through the close of the last fiscal year on June 30, 2001, IFC committed more than US$31 billion of its own funds and arranged $20 billion in syndications for 2,636 companies in 140 developing countries. IFC’s committed portfolio at the end of FY01 was US$14.3 billion.
