Volksbank BH dd

Osterreichische Volksbank AG opened its doors for business in Sarajevo last summer. The project is insured through the Osterreichische Kontrollbank, Austria's main financial and information service provider. MIGA has underwritten the $2.7 million reinsurance as administrator of the European Union Investment Guarantee Trust Fund. Volksbank BH's activities will include consumer loans, short- and long-term business loans (targeting SMEs), financial leasing, credit cards, and international and local payments. The guarantee provides coverage against the risks of transfer restriction, expropriation, and war and civil disturbance.

In the aftermath of the civil war, a competitive source of private financing is needed to facilitate the transition to a market-based economy. As the first Western European bank in-country, the project will have a significant developmental impact, helping to increase consumer confidence and improve the standards of local banks, particularly the quality and diversity of financial products. It will also provide access to the banking sector for SMEs, which have suffered from a lack of financing in recent years. Moreover, the project will contribute about $1.25 million annually to the government in the form of profit taxes, duties, and royalties, and is expected to create 78 new jobs.