TALLINN, ESTONIA, January 28, 1999 ---
The International Finance Corporation today agreed to a financing package
that will help the Estonian bank Eesti Ühispank (Estonian Union Bank),
the second largest bank in the Baltics, to respond to the growing demand
for housing finance in Estonia by providing affordable, residential mortgages
to individual homebuyers.
The eight-year loan of up to DM32.375 million (US$19.196 million), and
an option to acquire an equity stake of up to DM32.375 million (US$19.196
million) in Ühispank, are part of IFC's effort to promote the availability
of affordable housing finance for individual homebuyers.
By strengthening a major Estonian banking institution, the financing will
bolster the development of Estonia's banking sector, said Mr. Harold Rosen,
Director of IFC's Central and Southern Europe Department who signed the
agreement for IFC. He said the project would improve living standards
by making mortgages more readily available to homebuyers. And, he
added, the long-term finance would extend the maturity of Ühispank's funding
base, and underpin the progress that AS Eesti Uhispank has made in improving
its loan quality, risk management procedures and operational efficiency.
Skandinaviska Enskilda Banken's (SEB) involvement by way of a 34%
shareholding in Ühispank is a major positive development and was a key
factor in IFC's investment decision, said Mr. Rosen.
Mr. Ain Hanschmidt, President of Eesti Ühispank who signed the agreement
for Ühispank, said that the Bank is delighted by IFC's decision to grant
the loan because IFC is a careful and selective investor.
Supporting the overall development of the Estonian banking system, the
loan will enable Ühispank to better meet the needs of its clients as well
as improve the Bank's funding base, said Mr. Hanschmidt. He noted
that the significance of IFC's decision is underscored by the option to
acquire an equity stake in the Bank. Ühispank hopes to co-operate
with IFC in financing of other projects in the Baltics as well, Mr. Hanschmidt
SEB Baltic Holdings' President, Mr. Mats Kjaer, said that SEB has supported
Ühispank's discussions with IFC from the start. We are happy to have
IFC as a future co-owner in Ühispank and partner in our efforts to develop
the bank, said Mr. Kjaer.
IFC, part of the World Bank Group, fosters economic growth in the developing
world by financing private sector investments, mobilizing capital in the
international financial markets and providing technical assistance and
advice to governments and businesses.