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EBRD signs new mortgage facility with Zagrebacka banka
Croatians should benefit from a loan by the European Bank for Reconstruction and Development to Zagrebacka banka (ZABA), which will enable the bank to on-lend long-term funds to buy, build or refurbish residential properties. As well as generating competition in the country's mortgage lending, the loan will help meet the growing demands of residents wishing to purchase or develop real estate.
The committed facility will be for €50 million with the intention by the EBRD and ZABA to extend it in the second half of 2004 to €100 million via syndication.
The loan is the EBRD’s second to ZABA following a mortgage finance facility under which ZABA has already financed more than 2,000 individual mortgages since 1998. At the moment, the bank serves around 1.5 million retail depositors and over 240,000 retail borrowers. The EBRD and ZABA have been working together since 1995.
Kurt Geiger, EBRD Head of Financial Institutions, said the agreement is in response to increasing demand for long-term funding for individuals who wish to purchase or renovate their own homes. The facility has also been designed to create new instruments for the capital market. ZABA and the EBRD will work together on the standardisation of documentation and procedures, with a view to a potential mortgage-backed bond issue.
Franjo Lukovic, Chairman of the Management Board of Zagrebacka banka added: "Following the excellent experience with the EBRD's mortgage finance facility of 1998, the facility we are signing today is the second such support from the EBRD as we further expand the financing of individual mortgages. We see mortgage financing as much more than just pure property financing. We see it in the context of accelerating economic growth, which is impossible without resolving individual housing needs, and in that respect this new facility is of special relevance to both Zagrebacka banka and to the Croatian market in general."
ZABA, the largest Croatian banking group, is owned by the Italian bank UniCredito Italiano and the German insurance company Allianz. It has been the market leader in Croatia for over a decade controlling around 30 per cent of the market share in the national banking sector. As of 30 June 2003 the bank had €7.3 billion in assets, €587 million in equity and 5,890 employees. ZABA has also established a strong presence in the region through its Bosnian subsidiaries Universal Banka Sarajevo and Zagrebacka banka Mostar.
The EBRD signed its first deal in Croatia in 1994 and has since invested more than €1 billion, including €320 million in 2002 and €150 million in 2003. All told, the EBRD has mobilised some €2.4 billion from its business partners for investment in Croatia, for projects ranging from agribusiness to transport and banking to telecommunications.
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