EBRD, EIB and World Bank Group join forces to support eastern Europe

The largest multilateral investors and lenders in eastern Europe - the EBRD, the EIB Group, and the World Bank Group - have pledged to provide up to €24.5 billion to support the banking sectors in the region and to fund lending to businesses hit by the global economic crisis, reads a communique sent by those three institutions to Info-Prim Neo agency. This initiative complements national crisis responses and will deploy rapid, large-scale and coordinated financial assistance from the International Financial Institutions to support lending to the real economy through private banking groups, in particular to small and medium-sized enterprises. The financial support will include equity and debt finance, credit lines, and political risk insurance. The response takes into account the different macroeconomic circumstances in and financial pressures on countries in eastern Europe, acknowledging the diversity of challenges stemming from the global financial retrenchment. EBRD President Thomas Mirow said: "The institutions are working together to find practical, efficient and timely solutions to the crisis in eastern Europe. We are acting because we have a special responsibility for the region and because it makes economic sense. For many years the growing integration of Europe has been a source of prosperity and mutual benefit and we must not allow this process to be reversed.” “This is a time for Europe to come together to ensure that the achievements of the last 20 years are not lost because of an economic crisis that is rapidly turning into a human crisis,” said World Bank Group President Robert B. Zoellick. Under the two-year plan, the EBRD will provide up to €6 billion for the financial sector in 2009-10 in the form of equity and debt finance, to banks and directly to SMEs, and trade finance. The EIB will provide some €11 billion in SME lending facilities in Central, Eastern, and Southern Europe, of which €5.7 billion is already available for rapid disbursement, with a further €2.8 billion set for approval by end-April and further tranches expected to follow. The World Bank Group will provide support of about €7.5 billion. „The response to Europe’s integrated financial markets requires fast and coordinated action; from parent banks, which own a large part of the region’s financial sectors; from systemically important local banks; from home and host country authorities of cross-border banking groups and from the European institutions and the IFIs,” reads the release.