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FMO continues its cooperation with Russian NBD Bank

On Thursday, October 9th, a meeting of FMO and NBD Bank top officials took place where ongoing cooperation of the two institutions was discussed in light of the framework of the recent subordinated loan agreement. Regional business projects financed by NBD Bank total the amount of US$ 28.3 million, financed in part by FMO funds and guarantees.

FMO started cooperation with NBD Bank 3 years ago at the end of 2005 when the bank received the first credit line for SME lending within the Trade Facilitation Program in the amount of US$ 5 million. The cooperation was extended in 2006 when FMO and NBD Bank signed an additional agreement for the amount of US$ 5 million for a 5 year term. The funds received were also directed to financing of regional SME projects.

This year FMO and NBD Bank took steps towards further cooperation. In the summer of 2008 a Subordinated Loan Agreement was signed for a 5.5 year term. The loan amount - US$ 15 million proved to be the largest international subordinated loan in the Nizhny Novgorod Region. The new subordinated loan increased NBD Bank’s capital since the amount of subordinated loans is taken into account when calculating Tier II capital. Thus after the issue of the subordinated loan the bank capital showed increase by US$ 15 million. The funds received within the framework of the agreement were used by NBD Bank for financing of regional companies’ projects and the development of its own branch network.

It should be noted that as of today NBD Bank is the only bank in the region which capital incorporates subordinated loans from international financial institutions. Capital increase due to subordinated loans is a regular practice for the bank starting from 1999 (the first loan was made available to NBD Bank by EBRD, followed by US$ 2 million IFC loan (in 2003) and a US$ 3 million DEG loan (in 2005)).

As Huub Cornelissen, Director for Asia and Central Europe Markets of FMO noted “We are pleased how NBD Bank uses the finance provided and how it runs its business in general. Taking into account high international rating of the bank and the confidence we have in NBD  this is what we had expected from the bank anyway. Today we have achieved a sustainable relationship with the bank”.             

Yevgeny Maksakov, Head of Corporate Finance and Customers, NBD Bank: “Cooperation with FMO enables NBD Bank to continue implementation of the bank strategy aimed at development of regional SMEs as well as active development its network in the adjoining regions of Russia. We highly appreciate mutual trust achieved between FMO and NBD Bank and rely on further development of joint cooperation”. 

REFERENCE NOTE:

OAO NBD Bank – interregional bank specializing at dealing with SMEs. Founded in 1992. Presently NBD Bank network of structural units incorporates 20 offices in five Russian regions – Nizhny Novgorod, Ivanovo, Penza, Kirov and the Chuvash Republic. Head office is located in Nizhny Novgorod.

NBD Bank acquired significant experience of cooperation with international financial institutions, these including: International Finance Corporation, the Netherlands Development Finance Company, European Bank for Reconstruction and Development, German Corporation for Investments and Development, American Finance Corporation WorldBusiness Capital, Black Sea Trade and Development Bank, etc., as well as large Russian financial institutions.  

The Netherlands Development Finance Company(FMO) – is an international bank for development of the Netherlands. FMO invests into venture capital and financial institutions in developing countries. FMO investment portfolio accounts for euro 3.4 billion and is one of the largest bilateral banks for development in the world. Due to participation of the Netherlands government FMO can assume risks which other commercial institutions can not or so far can not assume. FMO Mission – creation of prosperous companies acting as driving locomotives for stable growth in their respective countries.