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Center-Invest Bank increases its capital by USD50m

On 17 May Center-Invest Bank and the German Investment and Development Company (DEG – Deutsche Investitions und Entwicklungsgesellschaft mbH) signed an agreement granting Center-Invest Bank a ten-year USD30m subordinated loan. Center-Invest Bank and DEG signed the agreement at the EBRD Annual Meeting in Kiev, which was attended by more than 3,000 delegates.

This is already the second subordinated loan obtained by Center-Invest in 2008. In April, Center-Invest Bank signed an agreement with the European Bank for Reconstruction and Development (EBRD) for a USD20m subordinated loan. As a result of the two deals the Bank's capital will increase by USD50m. 'Center-Invest Bank is the first bank to have both the EBRD and DEG as shareholders. Center-Invest has a clear, balanced strategy, which focuses on providing assistance to SMEs, introducing modern methods and practices into the agricultural sector, and financing energy efficiency projects,' DEG Head of Financial Institutions Andreas Zeisler said, 'Thanks to the excellent work of its people, objectives set out in Center-Invest Bank's Development Strategy, which was approved by its shareholders, are being met ahead of schedule: in the first quarter of 2008 the bank met targets that it had set for early 2009. Given such rapid growth, Center-Invest Bank needs to increase its capital base. With these subordinated loans it will be able to attract even more funds from the international financial markets, funds that will be used for the development of southern Russia.'

The EBRD (27.45%) and DEG (22.45%) are key shareholders of Center-Invest Bank. The loan funds will be included in Center-Invest's equity (Tier 2 capital). This will increase its invested capital and allow it to continue increasing its assets by achieving growth in lending volumes while maintaining the required capital adequacy ratio.

Center-Invest Bank intends to use the loan to further develop and expand its lending to SMEs and its retail banking services in the Southern Federal District.

This is already the fourth subordinated loan obtained by Center-Invest Bank. In addition to the recent EBRD loan, in 2004 the International Finance Corporation (IFC) granted Center-Invest a six-year USD5m subordinated loan, and in 2007 the Black Sea Trade and Development Bank (BSTDB, Greece) granted Center-Invest a seven-year USD10m subordinated loan.