OREANDA-NEWS. November 01, 2010. Europlan, Russia’s largest automotive leasing company, is getting a seven-year EBRD loan of up to 1.5 billion roubles (equivalent to USD50 million) to help meet growing demand for local currency leases, particularly for small-ticket transactions in small and medium-sized enterprises (SME’s), reported the press-centre of EBRD.

Leasing in Russia was expanding at a rate of 50 percent a year immediately before the crisis struck in 2008 and severely reduced both demand for leases and the availability of bank funding for leasing companies.

It had long been an alternative source of finance on the Russian market, particularly for SME’s, one of the financial sectors worst affected by the crisis, but whose business is beginning to recover.

Car dealerships had specially favoured leasing but as the crisis struck across the whole Russian economy, demand for new equipment and vehicles fell dramatically in 2008-09.   

Today, the limited availability of medium to long-term funding is the main obstacle to capital investment in Russia. 

The total volume of new leasing business in Russia amounted to USD 37 billion in 2007, up from USD 8 billion in 2005. In 2008, new business volumes dropped 28 percent and in 2009, they plunged 56 percent, according to recently-published industry figures. 

As demand for leases now picks up, these are the problems this loan aims to overcome by supporting a company whose prudent financial approach helped it to weather the crisis, said the EBRD’s managing Director for Financial Institutions, Nick Tesseyman.

In addition, this loan to Europlan, up to 90 percent of whose clients are SME’s, dove-tails with the EBRD’s wide-ranging programmes to fund the small business sector as part of a strategy to stimulate the real economy, Mr. Tesseyman added.

After leaping in a few years from start-up to market leader, Europlan now operates a branch network in 72 of Russia’s 83 regions, giving it the widest footprint of any Russian leasing company. Europlan has been an EBRD partner since 2002 and this is its fifth loan from the Bank.