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NewsEFSE becomes first international lender to provide loan in Serbian dinar


Luxembourg and Novi Sad, Serbia, 27 July 2017 – The European Fund for Southeast Europe (EFSE) has become the first international lender to provide a loan in Serbian dinars with a dinar 615 million (EUR 5 million) senior loan to Serbia’s Opportunity Bank JSC (OBS), to support small businesses, especially in rural areas.

The local currency for the loan was provided to EFSE by the European Bank for Reconstruction and Development (EBRD) by way of dinar denominated notes. In December, the EBRD issued a three-year, dinar 2.5 billion bond, making the development bank the first international organisation to issue a Serbian dinar bond.

The loan will allow OBS to offer local currency financing to borrowers in rural areas, such as small farmers, that have limited access to finance. Dinar-denominated loans also eliminate the risks associated with foreign-currency financing such as shifting exchange rates. OBS provides one-third of Serbia’s agricultural loans to small farmers, making it one of the leading lenders in this segment.

Speaking at the EFSE Annual Meeting in Split, Croatia, EFSE Board Chairman Christoph Tiskens said: “We are extremely proud to be the first international lender to provide financing in Serbian dinars, but we are just as proud that the money will be used to support micro and small farmers and rural entrepreneurs in Serbia. OBS has been a dedicated fund partner over the years, and as one of the country’s leading agricultural lenders, its ongoing work to spread financial inclusion in Serbia supports our mandate to promote economic development and prosperity in the regions we serve. ”

The President of Opportunity Bank’s Executive Board, Vladimir Vukotic said on this occasion: “Continued support from the EFSE is very important for Opportunity Bank as the financial institution in Serbia that is most dedicated to financial inclusion, which is embedded in its mission – to serve clients who have either limited or no access to financial services, with the result that 65% of our clients live in the villages and rural areas of Serbia. These clients absolutely prefer loans in dinars as opposed to loans with a foreign currency clause, due to the reliance of their local markets on the domestic currency. Hence, this joint pioneering endeavour of EFSE, EBRD and Opportunity Bank is extremely important as it will enable clients to take longer-term loans in the future. This loan will also facilitate Opportunity Bank’s continuous effort to make its contribution to the dinarization of the Serbian banking system by further increasing the share of its dinar loan portfolio, which is currently close to 50%.”