The European Bank for Reconstruction and Development (EBRD) is set to raise its stake in Russia’s Transcapitalbank to up to 28.6% after signing an agreement today to subscribe to a new issue of ordinary shares by the end of 2009 aimed at boosting its Tier-1 capital.
The transaction will allow the bank to raise over 1.2bn roubles (appoximately $43m equivalent) from its existing shareholders in order to both strengthen its capital base and enhance its competitive position at a time when the country faces an economic downturn.
The EBRD originally acquired a 25% stake plus one share in Transcapitalbank at the end of 2006 and then participated pro-rata in a capital increase in September 2008.
At an operative level, these new funds will allow the bank to increase its support for its core client base including medium-sized corporates and micro and small businesses across Russia.
This transaction will bring to $166m the total amount of facilities provided by the EBRD to Transcapitalbank since 2004.