Country:

Regional

Title:

Bank Restructuring

Objective:

To build a financial sector infrastructure dedicated to and capable of conducting SME finance, based on large retail networks, modern financial management and sound corporate governance. The key task in SE Europe, in this regard, is to promote the restructuring and operational strengthening of savings banks and other large retail banks. Specifically in FYR Macedonia, there is a need to consolidate the banking sector.

Description:

Restructuring of the following banks. In the initial phases, set out here, this would be achieved through the provision of a strong package of technical assistance, possibly setting up pilot units within the banks that would be « ring-fenced » from the rest of the banks’ balance sheets (« bank within a bank »), and advisers on corporate governance. An expansion of operations with these banks would be made conditional on implementation of a strong package of internal reforms.

Selected banks:
Romania
Romanian Commercial Bank
Romanian Savings Bank
Banca Agricola
Bulgarian Savings Bank
Albanian Savings Bank

FYR Macedonia bank consolidation. Strong technical assistance to assist the consolidation and merger process.

Preparation Status:

Rationale for Donor Support:

The large retail banks selected under this programme invariably have problematic balance sheets and a fragile corporate independence from the state. There is a need for step-by-step improvements in their charters, an upgrading of skills e.g. for SME lending, as well as organisational and operational changes. Given the long-term view that one must necessarily take, the uncertain prospects for privatisation and significant political risks it is difficult to find commercial partners for such a venture. Donor support will be required in the initial phases until the prospects of these institutions are less uncertain. The EBRD programme, as proposed, would represent the first steps in a longer-term cooperation in which the Bank will complement institution-building with a widening number of financial products.

Amount Required:

EUR 7 million Technical Assistance Funds.

Financing Plan:

Final Beneficiary

Client Banks in the region and their clients.

Major Sector/Project Issues:

Weak, unstable banks with poor management and low quality loan portfolios.
Need for improved credit skills
Need for consolidation and restructuring.

Contact numbers:

Funding enquiries:

Project enquiries: