Central and Eastern Europe banks receive €24.5bn rescue package

The European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and the World Bank have all pledged today to invest €24.5 billion (£21.9 billion) into the banking sectors in Central and Eastern Europe.

In particular, the funds are aimed at supporting small firms and helping them to survive the global economic downturn. Eastern European countries, in particular, have been hit hard by weak demand for commodities and exports, as well as the drying-up of international liquidity.

Ratings agency Moody’s recently said that faltering economic conditions in Eastern and Central Europe would affect the local subsidiaries of Western banks.

Meanwhile, the two-year joint initiative will include equity and debt financing, and access to credit and risk insurance aimed at encouraging lending, the three groups said in a joint statement.

“This initiative is on top of national government responses and was designed to “deploy rapid, large-scale and coordinated financial assistance… to support lending to the real economy through private banking groups, in particular to small-and medium-sized enterprises,” said the statement.

Thomas Mirow, EBRD’s president, said “The institutions are working together to find practical, efficient and timely solutions to the crisis in eastern Europe.”

The €24.5 billion investment is to be split as follows: The EBRD is to provide up to €6 billion for the financial sector, while the EIB will provide €11 billion of lending facilities and the remaining €7.5 billion is to be provided by the World Bank.

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