Line of Credit

The Line of Credit will be US$29.4 million and is expected to benefit approximately 85 enterprises. The LOC will be extended through eligible PFIs to private exporters and indirect exporters for working capital and investment projects, based on specific eligibility criteria. The main beneficiaries are export oriented enterprises in agriculture, agro-processing, manufacturing or other economic sectors that provide goods or services directly related to generation of foreign exchange export revenues. In addition, up to 30 percent of funds under the line of credit can be lent to indirect exporters (enterprises providing inputs/services to exporters) to help meet the financing needs of enterprises supporting export sector value chains.

The interest rates to enterprises under the LOC will be market-based, and the PFIs will on-lend the funds to exporters and indirect exporters based on their own credit assessment and risk of the borrower. Once qualified, a PFI will be expected to continue to meet the eligibility criteria at all times.

All large banks licensed in Moldova that have actively participated in the World Bank’s earlier credit line projects in Moldova have been invited to express interest for participation in the project. As of May 2014, seven banks have confirmed their interest for participation, including Moldova AgroInd Bank, Victoria Bank, MoldIndCon Bank, Mobias Bank, ProCredit Bank, FinCom Bank and Comert Bank.
While all interested banks will ultimately be appraised by the World Bank, the due diligence review began with three banks: ProCredit Bank, Mobias Bank and Victoria Bank. Based on the assessment, ProCredit Bank fully meets the eligibility criteria. Mobias Bank meets the eligibility criteria, except for credit concentration that is somewhat higher than the maximum set by the National Bank of Moldova (NBM) prudential regulations. The bank is expected to reduce concentration and bring the credit portfolio structure to full compliance by mid-2014. Victoria Bank (VB) generally meets eligibility criteria related to capital adequacy and financial condition. However, there are some concerns raised by NBM in its on-site supervision report that need to be addressed before confirming the bank’s eligibility as PFI. (See Annex 8 for a PFI appraisal summary.) Additional banks will be assessed during project implementation.