European Bank for Reconstruction and Development

Founded in 1991, the European Bank for Reconstruction and Development (EBRD) uses the tools of investment to help build market economies and democracies in 30 countries from central Europe to central Asia. Its mission was to support the formerly communist countries in the process of establishing their private sectors.^[1] By the seventh meeting, representatives of 40 nations and two European institutions had reached agreement on the bank's charter, its initial size,and the distribution of power among shareholders.^[2]

Headquartered in London, the EBRD is now owned by 63 countries and two intergovernmental instituitions. Despite its public sector shareholders, it invests mainly in private enterprises, usually together with commercial partners.

EBRD provides project financing for banks, industries and businesses, both new ventures and investments in existing companies. It also works with publicly owned companies to support privatization, restructuring state-owned firms and improvement of municipal services.

European Bank for Reconstruction and Development member states

Members, only financing

Members, recipients of investments

The EBRD’s mandate stipulates that it must only work in countries that are committed to democratic principles. The EBRD is directed by its founding agreement to promote, in the full range of its activities, environmentally sound and sustainable development.

The following countries are members and recipients of investments:^[3] Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina,Bulgaria, Croatia, Estonia, Georgia, Hungary, Jordan, Kazakhstan, Kyrgyzstan, Latvia, Liechtenstein, Lithuania, Macedonia, Moldova,Mongolia, Montenegro, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Tajikistan, Tunisia, Turkmenistan, Ukraine and Uzbekistan. The Republic of Kosovo is set to join as a recipient member on 17 December 2012.^[4]

The following countries are financing members only: Australia, Austria, Belgium, Canada, Cyprus, Czech Republic (receiving member until 2007-12-31^[5]), Denmark, Egypt, Finland, France, Germany, Greece, Iceland, Ireland, Israel, Italy, Japan, Luxembourg, Malta, Mexico,Morocco, Netherlands, New Zealand, Norway, Portugal, South Korea, Spain, Sweden, Switzerland, Turkey, the United Kingdom and theUnited States of America.

Two European Union institutions are also financing members: the European Community and the European Investment Bank.

In 2006 the organization stated that it would cease spending in the Baltic and central European nations by 2010, and funding would be shifted to Russia, Ukraine, Armenia, Kazakhstan and Uzbekistan.^[6] Due to the financial crisis this graduation process was postponed till 2015.^[7] Among the former communist countries only the Czech Republic has graduated within EBRD so far (this happened in 2007) and gained the status of the only ex-communist country that is a shareholder within EBRD and not a borrower any more.^[8]

The EBRD is not to be confused with the European Investment Bank (EIB) which is owned by the EU member states and supports EU policy.

Requirements for EBRD financing

Direct investments generally range from €5 million to €230 million. Smaller projects are financed both directly by the EBRD and through financial intermediaries. By supporting local commercial banks, micro-business banks, equity funds and leasing facilities, the EBRD has helped finance over 1 million smaller projects.

The EBRD provides loan and equity finance, guarantees, leasing facilities and trade finance. The Bank also finances professional development through support programmes.

Smaller projects may be financed through financial intermediaries or through special programmes for smaller direct investments in the less advanced countries.

To be eligible for EBRD funding, the project must:

· be located in an EBRD country of operations

· have strong commercial prospects

· involve significant equity contributions in-cash or in-kind from the project sponsor

· benefit the local economy and help develop the private sector

· satisfy banking and environmental standards.

[edit]Project structure

The EBRD tailors each project to the needs of the client and to the specific situation of the country, region and sector. The EBRD typically funds up to 35 per cent of the total project cost for a greenfield project or 35 per cent of the long-term capitalisation of the project company. The Bank requires significant equity contributions from the sponsors, which must equal or be greater than the EBRD’s investment.

There must be additional funding from the sponsors, other co-financiers or generated through the EBRD’s syndications programme.

[edit]Sectors supported by the EBRD

The EBRD finances projects in most sectors. These include:

· agribusiness

· energy efficiency

· financial institutions

· manufacturing

· municipal and environmental infrastructure

· natural resources

· power and energy

· property and tourism

· telecommunications, information technology and media

· transport

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