Oesterreichische Entwicklungsbank invests EUR 33 million in the microfinance fun...

Frankfurt, Germany and Vienna, Austria, June, 25 2008 - Oesterreichische Entwicklungsbank AG (OeEB), the official Development Bank of the Republic of Austria, and the European Fund for Southeast Europe, one of the largest microfinance investment funds worldwide, announced today that OeEB committed EUR 33 million to EFSE.

OeEB commits the funds to A-Shares (senior capital), B-Shares (mezzanine capital) and C-Shares (first-loss tranche). The Bank is the first shareholder to invest in all three risk tranches offered by the Fund.

Explaining the reason for this investment, Andrea Hagmann and Michael Wancata, Members of OeEB’s Board of Executive Directors, said: “Pushing the committed funding base of EFSE beyond EUR 600 million, OeEB’s investment increases EFSE’s available funds for refinancing qualified partner lending institutions and enables the Fund to refinance additional 16,000 loans to micro and small enterprises (MSEs) and low-income households in Southeast Europe over the next five years.”

Ms. Wisniwski, Chief Operating Officer of EFSE, elaborated that “at the Fund’s inception in 2005, EFSE was targeting capitalization of EUR 500 million by 2010, but this was already achieved end of 2007. Now we expect to reach a capitalization level of more than EUR 630 million by the end of year 2008 meaning that the Fund is well-endowed with funding to support its envisaged growth in investments during the coming years.” This is particularly noteworthy in view of the current liquidity crunch in international capital markets. In the presence of liquidity shortages and high demand for refinancing facilities for microfinance operations, the Fund is proving to be a reliable funding source. This, by ensuring continuous access to investments for its partner lending institutions, and hence, financial services to its ultimate target group of MSEs and low-income private households.

Since inception, EFSE has refinanced 97,000 loans to MSEs and low-income households. As of the end of March 2008, EFSE held an outstanding investment portfolio worth EUR 414 million. These investments targeted 52 financial institutions in Southeast Europe. In addition to the EUR 33 million investment, OeEB is making a EUR 200,000 donation to the EFSE Development Facility, a trust fund complementing EFSE’s financial investments with technical assistance, consulting and training. OeEB is also leveraging the existing EFSE C-Shares of the Austrian Development Cooperation (EZA).