Sofia, October 29, 2002—The International
Finance Corporation (IFC), the private sector developing arm of the World
Bank Group, will provide a credit line of US$5 million to Unionbank AD
in Bulgaria for on-lending to small and medium size enterprises (SMEs).
Founded in 1994, Commercial bank Unionbank has developed a strong franchise
in providing banking services to SMEs. Unionbank is headquartered
in Sofia and has nine branches and five offices in key Bulgarian cities.
As of September 30, 2002, Unionbank’s assets and capital amounted
to $66 million and $13 million, respectively.
IFC’s financing will help extend the maturity of Unionbank’s funding
base and will be used as a source of term funding for the development of
small and medium business finance activities. Lending in Bulgaria is heavily
concentrated towards the large corporate and public sectors. The
SME sector is underserved, and the availability of term finance for such
enterprises is scarce. The IFC credit line is aimed at addressing
Khosrow Zamani, IFC’s Director for Southern Europe and Central Asia. said:
“Stimulating financial intermediation is of particular focus for IFC,
especially to the SME sector, which is expected to drive Bulgaria’s future
economic growth and generate employment. The investment is also a
signal of IFC’s continued commitment to develop the private sector and
work with locally-owned financial institutions.”
Evgeny Gospodinov, Unionbank’s Management Board member, said: “The investment
of IFC will allow Unionbank to strengthen its position as a leader in banking
services to SMEs. With its seven-year maturity and conditions for
sub-borrowers, this credit line will supplement the bank’s current activity
focusing on the small and medium businesses, expand the range of credit
products and contribute to improvement of their quality to the benefit
of customers.” Mr. Gospodinov added: “Unionbank will carry
out its operations in accordance with environmental management system,
which will verify that subprojects comply, at a minimum, with the environmental,
labor, health and safety regulations of Bulgaria and public consultation
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 $34 billion of its own funds and arranged
$21 billion in syndications for 2,825 companies in 140 developing countries.
IFC’s committed portfolio at the end of FY02 was $15.1 billion,
with an additional $6.5 billion held for participants in loan syndications.