In a joint announcement, bankers said the loan, with a final maturity of seven years and yearly interest rate of LIBOR +2.25 percent, will help folk with smaller businesses and help to finance mortgages for residential housing.
In Lithuania, medium-term funding has not been easy for smaller businesses to grab on to. Julius Niedvaras, however, stressed that the IFC loan will allow Vilniaus Bankas to begin dishing out long-term loans to the little guys in Lithuania's business world.
"The loans, with a maturity ranging from two to seven years, will be granted to private companies with total assets not exceeding 60 million litas ($15 million)," explained Niedvaras. "Currently Vilniaus Bankas has more than 1,300 corporate and more than 1,500 individual borrowers. More than half of these borrowers are attributed to the small- and medium-sized companies category established by the IFC. It is quite obvious that additional long-term financial resources should make a positive impact on this segment of the Lithuania economy."
Harold Rosen, director of IFC's Central and Southern Europe Department, came to Vilnius for the loan-signing ceremony. He referred to the $5 million of the loan's total sum, which has been earmarked for use in housing finance by individuals, as an important way "to broadly spread the benefits of a market economy" and improve living standards.
As for the SMEs, Rosen mentioned that the Lithuanian economy only stood to benefit from making more funds available to them.
"Experience throughout the world has shown that however well the large companies do, it is almost always the small- and medium-sized enterprises that provide the engine of economic growth," said Rosen. "We're very impressed with the potential of the sector, and we're delighted that there's an opportunity to have such a wonderful intermediary as a Vilniaus Bankas to help us in that."
In addition to the $20 million loan to Vilniaus Bankas, IFC has supported three other projects in Lithuania with a total of $35.5 million in financing. Rosen hinted that more IFC money could make its way to Lithuania in the future.
"I'm afraid we can't say much about transactions that are still under preparation, but I could mention we are interested in helping other parts of the financial system. Things like leasing, housing finance, insurance are all areas where we're quite experienced elsewhere in the world," Rosen said.
Rosen noted also that there were "big opportunities and needs" in Lithuania in the areas of hotels, agricultural business and infrastructure.
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