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Small firms set to boom with microcredit Posted: 04 Apr 2008 10:16 AM CDT Moscow city government has teamed up with a major bank to create a company specializing in microcredit – a method for giving small businesses start-up loans. The President of VTB 24 Bank, Mikhail Zadornov, said the new company, called Microfinance, was looking forward to helping developing firms. Small and medium-sized firms are key to diversifying the economy away from the oil and gas sector, according to the government. Zadornov added that in the future he may add new categories of loans for citizens ranging from servicemen to young people. In 2008, VTB 24 is planning to allocate around 60 million dollars for micro-loans. Earlier this month, Zadornov met Professor Muhammad Yunus, the Bangladeshi economist who pioneered microfinancing. He gave his backing to the Moscow-based project, saying he was encouraged that a first-rate bank had got involved. Yunus is the founder of the Grameen Bank – a world leader in the field of microcredit. |
Posted by: Sabine Kurjo McNeill | April 5, 2008
Microfinance in Russia
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Posted in Microfinance, Social networks | Tags: Microfinance, russia
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Interestingly, this appears to have been enabled by EBRD and other commercial banks. I wonder what has Dr Yunus actually approved then?
Lilly
http://www.ebrd.com/new/pressrel/2006/184dec18.htm
18 December 2006
EBRD makes loan to Russia’s VTB 24 bank
Deal brings large swathes of Russia within reach of EBRD’s small business programme
The European Bank for Reconstruction and Development, the pioneer of small business lending in Russia, has provided a $200 million syndicated loan to enable VTB 24 to offer credit to micro, small and medium-sized enterprises across the country.
VTB 24 thus joins 9 other banks in Russia and over 90 financial intermediaries in the EBRD’s countries of operation with which the Bank is working to support microfinance
The EBRD is taking up to $150 million of this loan for its own account. The remaining $50 million will be syndicated to international banks under an EBRD A/B loan structure. Barclays Capital, the investment banking division of Barclays Bank PLC, is acting as Mandated Lead Arranger, Bookrunner and Underwriter of the $50 million EBRD B Loan.
This new partnership with VTB 24 will significantly increase the reach of the EBRD’s small business lending programme, adding 39 Russian regions or republics where EBRD-supported credits will be available for small enterprises to improve their businesses, thus helping to diversify the economy and creating sustainable growth from the ground up.
The main instrument of the EBRD’s path-breaking efforts in this sector has been the Russia Small Business Fund (RSBF), thanks to whose funding Russian partner banks have been able to make nearly 350,000 small, micro and medium-sized loans for a cumulative total of $3.3 billion since the RSBF was launched with the backing of the G-7 and Switzerland in 1994.
EBRD President Jean Lemierre said supporting small businesses lies at the heart of the Bank’s mission, but that much more work needed to be done to help create a thriving sector which could multiply jobs and give ordinary people the chance to improve their lives. In Russia alone, aggregate demand for this type of credit was estimated at $20-30 billion and the funding shortage was one of the biggest impediments to growth for small businesses, Mr. Lemierre said at a signing ceremony in Moscow.
VTB 24 President Mikhail Zadornov said small business lending was a priority for his bank and that working with the EBRD in this sphere was very important. “Our small business lending programme is one of the leading ones on the Russian market and our loan portfolio already exceeds $700 million,” Mr. Zadornov said.
VTB 24’s expanding network gives the EBRD a means to reach out to large swathes of the population which have never benefited from a bank loan before. A key component of the Bank’s cooperation with VTB 24 will be a programme funded by the EU to train loan officers in small business lending techniques in the Russia’s Southern Federal District, part of a bid to foster the economic revival of the northern Caucasus.
Press contact:
Richard Wallis, Moscow – Tel: +7495 787 1111; E-mail: wallisr@ebrd.com
By: lilashana on April 6, 2008
at 12:52 am
Lilly,
Dr. Yunus advocates making social business funds available – even via a social business stock market.
It may have been his influence that persuaded both VTB and EBRD to make the funding available.
I find it sad that Barclays Capital need to play a role. But at least it points to who controls the controllers…
Have you emailed Richard Wallis in Moscow?
Sabine
By: Sabine on April 8, 2008
at 3:32 am