* Loan Will Also Boost Local Small and
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
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.