Slavonska Banka d.d., Osijek

MIGA has issued a guarantee in the amount of €22.5 million ($21.5 million) to Hypo Alpe-Adria-Bank A.G. (HAAB), of Austria to cover its 25 million shareholder loan plus interest to Slavonska Banka d.d., Osijek (SBO) in Croatia. The coverage is for ten years, and is against the risks of transfer restriction and expropriation of funds.

MIGA's guarantee replaces an existing guarantee provided to HAAB in 1999, when HAAB concluded a five-year loan agreement with SBO (see MIGA's Annual Report 2000 for original project description). During fiscal 2002, HAAB replaced the five year loan agreement with a ten year deposit agreement so that the funds would be considered as part of SBO's capital. Lengthening the loan maturity from five to ten years will allow SBO to continue to expand its lending business and to provide longer term facilities, thereby bolstering Croatia's financial sector and allowing Croatian companies to grow. It will continue to have significant developmental impact as SBO focuses on lending to SMEs in the region of Eastern Slavonia. Among the sectors that will continue to benefit from the loan are tourism, agriculture, agribusiness, the woodprocessing industry and the building-materials industry.