UniCredit Bank Serbia JSC

MIGA has issued a guarantee of up to €95 million covering UniCredit Bank Austria AG’s (UBA) €100 million shareholder loan to its subsidiary, UniCredit Bank Serbia JSC (UBSR). The coverage is for a period of up to five years against the risks of transfer restriction, expropriation, and war and civil disturbance.

The loan will provide UBSR with long-term liquidity and improve UBSR’s asset-liability management by matching assets and funding of similar maturities. The loan is part of a broader funding strategy of the UniCredit Group to finance its subsidiaries and is particularly important in view of the current turmoil in financial markets worldwide, including Serbia.

MIGA supports this project in conjunction with the Financial Sector Initiative framework recently presented to MIGA’s Board of Directors as part of a coordinated international response to the ongoing global financial crisis. Serbia, like many other countries in the Europe and Central Asia region, is currently facing difficult fiscal adjustments along with the need for external financing. MIGA’s support to the project will supplement the International Monetary Fund’s program for Serbia by injecting liquidity into the UBSR, boosting confidence in Serbia’s financial sector, and contributing to the improvement of the country’s financial stability.

One of the main objectives of the World Bank Group’s country partnership strategy for Serbia for 2008-2011 is to encourage dynamic private sector led growth. The proposed project is fully consistent with this objective.