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EBRD is open for business

Monday 30 November, 2009

The International Trade Association of Greater Chicago hosted a talk given by Varel Freeman of the European Bank for Reconstruction & Development (EBRD) @ the offices of Baker McKenzie. Here’s what he had to say:

The EBRD was formed to transition the economies of the former USSR into open market economies & now has offices in 30 countries in  central-eastern Europe to central Asia.  They offer debt & equity financing in the form of guarantees, shares, etc., (but no grants) to finance infrastructure/power projects (25-30%), agribusiness (10%) projects, & 1/3 is with other financial institutions.  They financed 5B Euros last year (30% equity), & are on track to finance 8B Euros this year.  The EBRD has 61 shareholders, including the US (10%), & European Investment Bank.  They are a risk-taking commercial partner who make business decisions, not political ones.  They don’t even deal with politically-connected people.  They don’t displace or compete with local banks, but 20% of their activity is with governments.

Q&A

  • The EBRD does do trade financing through commercial banks, but that fell off a cliff with the economic downturn.
  • EBRD headquarters are in London & English law applies for legal purposes, but can work with offshore holding companies.
  • The EBRD has mainly European clients, but wants more from the US.  They are seeking capital expansion because demand for financing is increasing.
  • The EBRD assures they will foreclose against the wishes of a shareholder if need be.  They will be hard-nosed & won’t roll over.  Their goal is to have an enforceable framework.
  • They do 150 background checks for 350 transactions each year to ferret out politically connected people.
  • They do provide financing to distressed industries, i.e. automobiles, but very carefully.  They financed a JV which is now profitable.  They are open to restructuring troubled loans.
  • Bank credit ratings are informal, supplemented by credit ratings.
  • The EBRD charges market rates for renewable energy projects & can lend in many currencies.
  • The EBRD doesn’t exist just to help Westerners.
  • There is some overlap with Export-Import Bank & OPIC-Overseas Private Investment Corp.

They don’t have any offices in the US, but you can contact them directly or through the US Dept. of Commerce.

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