Raiffeisen Leasing d.o.o. Sarajevo

MIGA issued two guarantees, totaling $18.6 million, to Raiffeisen Zentralbank Österreich AG of Austria, covering shareholder loans to Raiffeisen Leasing d.o.o. Sarajevo in Bosnia and Herzegovina. The coverage is for up to five years against the risks of transfer restriction and expropriation.

The project funds the growth of Raiffeisen’s domestic leasing portfolio by supporting investment primarily in industrial machinery, equipment, and vehicles. MIGA’s backing should contribute to the development and strengthening of the country’s leasing sector, which is in an embryonic stage. Raiffeisen fills a gap in helping to meet the needs of SMEs, which according to typical banking criteria, may not qualify for long-term loans needed for capital investment. The leasing company allows payment of the leasing installments with the cash flow and income generated by the leased equipment itself. Seventy percent of leasing goes to SMEs. The focus on SMEs is reinforced by increased cooperation with business partners and retailers to provide them with leases for their capital investments in equipment, which is mostly outdated and in need of replacement or modernization. Together, these enhancements will enable SMEs to improve production efficiency and quality, and assist in their long-term growth.

The project is part of an overall World Bank Group effort to help create a transparent and solid leasing sector.