Press Releases

IFC Invests EUR 1 Million in Federal Republic of Yugoslavia’s Banking Sector

Afshin Molavi                Phone:(202) 458-5674                Fax:(202) 974-4384

Washington DC, November 5, 2001—The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has signed an agreement to invest EUR 1 million in Raiffeisenbank Jugoslavija A.D., a newly established bank that will provide services to local enterprises, small and medium-sized companies and international joint ventures in the Federal Republic of Yugoslavia (FRY).

The investment fits in with IFC’s strategy of strengthening local financial institutions in FRY in order to support the private sector, which is currently underserved by existing institutions.  Sustained private sector access to credit and other financial services is an essential element of economic growth and sustainable job creation.

Raiffeisenbank Jugoslavija was established on April 11, 2001 with initial capital of EUR 10 million.  The main sponsor of the project, the Austrian RZB Group (Raiffeisen Zentralbank Österreich AG), is the head institution of the second largest banking group in Austria. In 2001, the RZB Group was awarded “Best Bank in Central and Eastern Europe” by Global Finance magazine and “Bank of the Year in Central and Eastern Europe” by The Banker.  The IFC investment will represent 10% of the share capital of the bank.

“IFC is committed to supporting and strengthening FRY’s financial sector to enable it to provide the much-needed financing to fuel the growth of the industrial sector,” said Mr. Khosrow Zamani, Director of IFC’s Southern Europe and Central Asia Department.  “We are very pleased to further develop our relationship with the RZB Group, which started back in 1986 when our institutions were partners in Unicbank Rt., Hungary, today known as Raiffeisen Bank Rt.,” he added.

RZB’s Deputy Chairman, Herbert Stepic added, “Wherever we go we act as a local bank doing business predominantly with local clients. With the IFC as a partner we will further improve our already good position of attracting small and medium sized companies.”

The establishment of the bank is a notable event for FRY’s banking and enterprise sector.  The success of the bank will have an important demonstration effect.  The RZB Group will introduce western banking techniques into the local market, which will strengthen local banking practices and enhance private sector development, thus facilitating economic growth and helping to fight poverty.

In May 2001, the World Bank Executive Board confirmed FRY’s succession to the membership of the former Socialist Federal Republic of Yugoslavia.  Following its  membership to the World Bank, FRY’s membership in IFC was confirmed.  Since then, IFC has played an active role in FRY.  IFC has assessed business sectors with potential, including banking, agribusiness, garments, pharmaceuticals, telecom/information technology.  IFC intends to provide the country with strong support for restarting the flow of investment capital, which will be the driving force for the country’s economic recovery.

RZB has a long term strategy for CEE, where it runs 13 banks with a comprehensive regional network of more than 400 banking outlets and over 300 further business locations of its specialized subsidiaries.  The twelve CEE countries covered are: Hungary, Poland, Slovakia, the Czech Republic, Croatia, Bosnia and Herzegovina, Bulgaria, Romania, Russia, the Ukraine, Yugoslavia and Slovenia (representative office).  The balance sheet total of RZB’s “Network Banks” in CEE has grown in 2001 by approximately 30 per cent to EUR 9 billion as of the end of June.  The RZB Group employs a staff exceeding 10,000 in the region.

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, IFC has committed more than US$31 billion of its own funds and arranged US$20 billion in syndications for 2,636 companies in 140 developing countries.  IFC’s committed portfolio at the end of  June 2001 was US$14.3 billion.