Hypo Alpe-Adria-Bank AD Banja Luka

MIGA provided an additional €4.6 million of coverage to Hypo Alpe-Adria-Bank AG (HAAB) of Austria for its €5.1 million equity investment in Hypo Alpe-Adria-Bank AD Banja Luka (HAAB Banja Luka) in Bosnia and Herzegovina. The investment is guaranteed for a period of 10 years and coverage is provided against the risks of expropriation and war and civil disturbance.

In FY03, MIGA issued a €13.8 million guarantee to HAAB of Austria for a €15.4 million equity investment in HAAB Banja Luka in Bosnia and Herzegovina. This amount, combined with the new investment brings HAAB’s total equity invested in HAAB Banja Luka to €20.5 million; MIGA’s coverage of both investments amounts to €18.4 million.

The project involves the recapitalization of HAAB Banja Luka and the further expansion of its lending activities. In addition to increasing the capacity of the financial sector, the project is expected to benefit the local economy by on-lending to a variety of businesses. The latest equity investment will support the objectives of last year’s expansion efforts, yielding direct and indirect development impacts for Bosnia and Herzegovina. The project will bolster the credit capacity of the local economy while bringing know-how, technical solutions, and new products to the local market. The project will also provide extensive training for bank employees. While the project will not directly contribute to export earnings, the expansion of funds to local businesses is expected to facilitate up to $50 million in exports annually.