INTERVIEW: Black Sea Trade, Devt Bank to double loan portfolio in 4 years

MOSCOW, Oct 29 (PRIME) -- The Black Sea Trade and Development Bank (BSTDB) plans to almost double its loan portfolio to 2.3 billion euros over the next four years, President Dmitry Pankin said in an interview to PRIME released on Monday.

BSTDB is an international non-government development bank established by Russia, Greece, Turkey, Bulgaria, Romania, Ukraine, Albania, Azerbaijan, Armenia, Georgia, and Moldova in 1999. Russia became the chairing state of the bank in July 2018.

“My plans include an increase of the combined portfolio of the bank. It currently stands at 1.3 billion euros, which is a small figure taking into account the paid-up capital of 800 million euros and the shareholder equity of 3.5 billion euros. We assume growth of the loan portfolio to 2–2.3 billion euros over the next several years in our new strategy,” Pankin said, adding that the strategy will be developed for the next four years.

“We already had first discussions (of the strategy),” he said.

In the previous years, BSTDB was focused on development of the private sector and on small and medium-sized businesses. “Now, we are suggesting reorientation of the strategy, we are suggesting working with infrastructure projects: the transport sector, ports, communications, roads, waste treatment facilities, water channels,” he said.

In Russia, the bank plans to work on transport and public utility infrastructure, he added.

LOANS IN RUSSIA

The bank wants to triple the amount of loans issued to Russian companies to 300 million euros before the end of 2020. “We will start active work in different directions to raise the amount of loans and the share of Russia in our portfolio. The goal is to raise the portfolio to about 300 million euros by the end of 2020, to about 20% of the loan portfolio of the bank. Currently, the Russian portfolio amounts to slightly more than 100 million euros,” he said.

Russia has significantly reduced its share in the portfolio over the past years because other development banks, like the European Bank for Reconstruction and Development and the European Investment Bank, terminated their operations in the country. The banks usually offered BSTDB participation in the projects, while now the bank has to look for projects on its own, he said.

“It is very important to try and maintain operations of an international development bank in Russia, especially when other banks are closing their offices,” he said.

BORROWING IN 2019

BSTDB plans to issue short-term Eurocommercial papers worth U.S. $200–300 million in 2019. “Our plans for 2019 include an offer of about $200–300 million short-term papers, and a possible refinancing of our Eurobonds by 2020,” he said.

The bank placed $500 5-year Eurobonds in 2016, when the bank’s loan portfolio was actively growing. The bank expected it to grow further, but it failed to reach the planned parameters, he said.

BSTDB want to raise loans to projects in the regions where the bank operates, but it would finance the projects with the credit lines opened with other banks as priority, not with new debt securities.

“We are yet to use a 100 million euro credit line of the European Investment Bank it opened for us to finance small and medium-sized businesses in the E.U. states fully. We are also yet to use the line of Nordic Investment Bank, KFW,” he said.

“Further plans include the issue of Eurocommercial papers. These securities are short-term, procedures of their issue are easier, and the yield on them will amount to about 0.7% if we place them now,” he said, adding that it would be more profitable to raise short-term debt to finance current projects and refinance them with longer debts if the bank’s loan portfolio grows.

OWNERSHIP

Serbia is now considering becoming a shareholder of the bank.

“We are now discussing the issue of becoming a shareholder of the bank with the authorities of Serbia…I would like to point out that it is only at a preliminary stage now. It would be completely wrong to say that the amount of participant states expands tomorrow,” he said.

Russia, Greece, and Turkey own 16.5% in BSTDB each, while Bulgaria, Romania, and Ukraine own 13.5% each, Albania and Azerbaijan have 2% stakes each, and Armenia, Georgia, and Moldova own 1% each.

End