The EBRD is making it easier for small and medium-sized companies in Montenegro to get the funding they need in order to grow by extending a €5 million credit line to Hipotekarna Banka and by boosting the Podgorica-based bank’s risk management procedures.

Due to the economic uncertainty caused by the Eurozone crisis, many banks in Montenegro are lending less to small and medium enterprises (SMEs) and are reluctant to provide longer than short-term loans to their corporate clients. A recent tightening of the criteria that Montenegrin companies have to satisfy to prove their creditworthiness has made the problem worse. As a result, many well-managed and healthy SMEs struggle to obtain the financing they require if they are to grow and contribute to Montenegro’s economic development.

Under the EBRD package, €5 million will be extended to Hipotekarna Banka for on-lending to SMEs – including companies outside the capital Podgorica – on a medium-term basis. In addition, technical cooperation (TC) funds provided by donors will be used to strengthen Hipotekarna’s credit assessment and risk management procedures. This will enable the bank to reach out to some SME clients whose risk profile would previously have been considered too difficult to manage.

“This is the EBRD’s first project in Montenegro’s financial sector since 2011 and will help address the demand among local SMEs for longer-term financing,” said Giulio Moreno, head of the EBRD’s office in Podgorica. “The credit line will also allow Hipotekarna Banka to increase its market share and consolidate its strategic position in SME lending in the country.”

Balkans.com