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Banks (Finance)

KfW Allocates $118 Million to Eight Russian Banks for SME Lending

Strategic Insights

— 1 min read

German banking group KfW has concluded an agreement with eight Russian banks to provide $118 million in loans to finance lending to small and medium enterprises (SMEs). The agreement follows a deal signed by KfW and Vnesheconombank (VEB) in February 2009, providing for a total of 200 million euros in financing. The program aims to support Russian SMEs during the crisis, with KfW lending the funds at 10-12% annually, including VEB's commission of 4-5% annually, resulting in SME borrowers receiving loans at 12-14% annually.

Key Takeaways:

  • KfW has agreed to provide $118 million in loans to eight Russian banks to finance lending to SMEs.
  • The agreement follows a deal signed by KfW and VEB in February 2009, providing for a total of 200 million euros in financing.
  • The eight Russian banks involved in the agreement are Promsvyazbank, NBD Bank (Nizhny Novgorod), Spurt Bank (Kazan), Kedr (Krasnoyarsk), Primsotzbank (Vladivostok), Rosevrobank, Loko-Bank, and TransCapitalBank.
  • VEB has issued just one guarantee, for $32.8 million on a loan to Promsvyazbank, which signed an agreement with KfW in July on a five-year loan totaling $30 million.
  • The collateral requirements for the KfW loans are currently being determined, as well as the interest rates on those loans.
  • Mikhail Kopeikin, VEB Deputy CEO, stated that the deal was a pilot project for VEB, but the bank has not managed to resolve all the problems associated with implementation.
  • EDIEditorial Staff. (28 Oct 28, 2008). KfW to allocate $118 mln to 8 Russian banks for SME lending. Interfax.

Statistics:

  • Total funding: $118 million
  • Total agreements: 8 Russian banks
  • Initial deal: 200 million euros in financing
  • Loan duration: 5 years
  • Interest rates: 12-14% annually
  • VEB commission: 4-5% annually
  • Guarantee issued by VEB: $32.8 million to Promsvyazbank

Sources:

  • EDIEditorial Staff. (28 Oct 28, 2008). KfW to allocate $118 mln to 8 Russian banks for SME lending. Interfax.
  • Head of KfW's representation in Russia, Daniil Algulyan.

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