Priorbank

MIGA has issued a $28.5 million guarantee to Raiffeisen Zentralbank Österreich AG (RZB) of Austria, covering its shareholder loan of up to $30 million to its subsidiary Priorbank of Belarus. The coverage is for a period of up to six years against the risks of transfer restriction and expropriation.

Priorbank will use the shareholder loan from RZB to expand operations. One-third of the loan is expected to pay for technological investments, such as a network of automatic 24-hour outlets. The rest will be lent to small and medium-size enterprises, which often face constraints in accessing credit. Approximately 60 percent of that onlending will go to the manufacturing sector, 20 percent to finance trade, and the remaining 20 percent to other sectors like construction and agriculture.

This project will strengthen Priorbank, the leading private bank in Belarus. The country’s nascent private sector operates in a difficult political and regulatory environment in a largely un-reformed and centrally planned economy. Local financial institutions face an additional burden of government-directed lending to state-owned enterprises. By supporting RZB’s shareholder loan, MIGA is supporting the private sector and helping increase the availability of long-term commercial financing—both consistent with the country assistance strategy for Belarus.

Priorbank will also play an important role in providing know-how, technical solutions, and new products to Belarus’ financial and commercial sectors. Technological investments under this project will also help improve Priorbank’s efficiency.