(Updates with quotes, details)
By Sebastian Tong
LONDON, Feb 16 (Reuters) - The European Bank for
Reconstruction and Development said on Wednesday it returned to
profitability in 2010 with a 1.4 billion euro net profit, helped
by faster economic recovery in eastern and central Europe.
The London-based EBRD's profit marks a sharp reversal from
the 746 million euro net loss it suffered in 2009.
"Our region remains fundamentally attractive and in 2011 we
will further strengthen our efforts to finance local companies
and support foreign direct investment into the region," EBRD
Chief Financial Officer Manfred Schepers told a news conference.
Set up at the end of the Cold War to help former communist
countries adjust to free markets, the EBRD committed a record 9
billion euros in financing in its 29-country remit last year, up
from 7.9 billion euros the year before.
By sub-region, Russia accounted for the largest share of the
EBRD's 2010 lending at 26 percent while financial firms took the
largest share by sector at 22 percent.
The bank invested 2.3 billion euros in Russia last year,
around the same level as the year before but the amount was
distributed among a larger number of projects, Schepers said.
"In Russia, we anticipate strong investments (this year) and
an increasing amount of that will be rouble-based," he added.
Five former representatives of the EBRD's Russian operations
are being investigated by police in Britain and Russia on
suspicion of bribery.
Schepers said he was saddened by the case but said he was
comforted by the fact that the bank's processes for evaluating
and monitoring its investments proved to be resilient.
REAL ECONOMY
Schepers said the bank stepped up lending to the real
economy last year, with direct investment to companies
accounting for 26 percent of total lending compared to 22
percent in 2009.
Lending to financial institutions accounted for 22 percent
of total investments.
Responding to resurgent food prices, the bank also stepped
up investments in agriculture-related businesses, making a
record 836 million euros in loans, up 31 percent from 2009.
The bank expects to invest 8 billion-9 billion euros this
year.
The EBRD said projects in the pipeline would aim to address
the region's lack of economic diversification, underdeveloped
capital markets as well as energy efficiency.
Its equity investments were valued at 6.3 billion euros at
the end of last year with the overall equity portfolio valued 17
percent above cost.
Non-performing loans comprised 3 percent of the EBRD's total
loan book last year.
"Over the last five years ... the bank has been able to
increase its core Tier 1 capital by 57 percent to 12.1 billion
euros purely from retained earnings," Schepers said.
He said the bank planned to borrow 7 billion euros this year
and its borrowing programme would include two dollar-denominated
global bonds, one of which was priced on Tuesday.
[]
The bank's shareholders, which comprise 61 countries and the
European Union and the European Investment Bank, last year
approved a 10 billion euro capital increase, bringing the bank's
total capital resources to 36.3 billion euros.
(Reporting by Sebastian Tong; Editing by Susan Fenton)
