OREANDA-NEWS. March 30, 2009. The European Bank for Reconstruction and Development is making available a five-year loan of US150 million to VTB24 in order to stimulate lending to Russia’s small businesses and help them overcome the drop in lending to this sector of the economy caused by the crisis, reported the press-centre of EBRD.

VTB24, a subsidiary of Russia’s VTB banking group, is pushing to increase lending to micro, small and medium-sized businesses at a time when many other banks active in this sector have curtailed credit to this vital segment of the economy, especially in the regions outside the biggest Russian cities.

The EBRD’s funding will allow VTB24 to offer the longer maturities small business clients need and find it difficult to access in Russia, particularly since the onset of the crisis last year.

VTB24 will use the new funding to make loans of up to US 200,000 in cities with a population of less than one million. VTB-24 is present in nearly all Russian cities with over 100,000 inhabitants.

This loan is part of the Bank’s response to the contraction of small business lending since the crisis hit Russia last autumn, said Alain Pilloux, EBRD Business Group Director for Russia. VTB24 gives needed financial access at a critical moment to micro, small and medium-sized enterprises (MSME’s) across the country, particularly in difficult and marginal regions, Mr. Pilloux added at a loan signing ceremony in Moscow.

The MSME sector will play an important role in helping Russia overcome the economic challenges of the crisis.

This is the second EBRD loan to VTB24 targeted at this business segment. In December 2006, the EBRD raised a \\$200 million loan for VTB24 to on-lend to Russian small businesses. Half of this sum was syndicated to international banks.

This new EBRD loan will be supported by an EU-funded training programme, known as the North Caucasus Micro, Small and Medium-sized Enterprises Development Initiative, aimed at increasing lending to small businesses in the North Caucasus where VTB24 recently opened branches in two regional capitals of Vladikavkaz and Nalchik.