* EBRD will need more capital if more required of it
* Emerging Europe slowdown bottoming out after v. poor data
* EBRD talking to banks about investing in E.European units
* Graduation for EU members in 2010 not a priority
By Carolyn Cohn
LONDON, May 12 (Reuters) - The European Bank for
Reconstruction and Development Bank will need more capital if it
has to do more to help central and eastern European economies,
EBRD President Thomas Mirow said on Tuesday.
The bank has capital of 20 billion euros but G20 leaders in
April agreed a $1.1 trillion increase in funds for the
International Monetary Fund and said the capital needs of the
EBRD should also be reviewed.
"It depends on what our shareholders expect from us. If they
want us to do very much more, then the question of a capital
increase will be on the table," Mirow told Reuters and Reuters
Television in an interview.
Set up at the end of the Cold War in 1991 to help former
communist countries adjust to free markets, the EBRD has said it
would spend a record 7 billion euros in investment this year to
help its region of operation combat the worst financial crisis
since the fall of the Berlin Wall 20 years ago.
Mirow said 2 billion euros of that amount has already been
committed.
The development bank slashed its GDP forecasts for the
region last week to a 5.2 percent contraction in 2009 from a
forecast of 0.1 percent growth made only a few months ago.
"We had a disastrous Q4 2008 and a very bad Q1 2009. We see
some bottoming out but it's not possible to predict anything
better than we did," Mirow said.
He said he was particularly concerned about deteriorating
economic conditions in the Baltic states, Hungary, Ukraine and
Russia.
An improvement in emerging Europe was also linked to the
pace of any western European recovery.
"Countries like the Czech Republic or Slovakia or Hungary
are tremendously dependent on what is happening in Germany,
Austria, Italy and other parts of western Europe," he said. "We
see some bottoming out in the course of this year and a certain
return to growth in 2010."
BANK LOANS
To help the banking system in the region, the EBRD said last
week it would invest 432.4 million euros in the eastern and
central European subsidiaries of Italy's UniCredit <CRDI.MI>.
Mirow said similar deals were in the works with Western
parent banks in Austria, Belgium, France, Germany, Greece, Italy
and Sweden. "We are talking to other banks. We have identified
12 parent banks in western Europe," he said.
Mirow declined to name the banks, but said: "All the
connoisseurs know the names very well."
He told Reuters that any similar deals to the Unicredit loan
were likely to be agreed by the end of June, but none this week.
The EBRD, which operates in 30 countries including Mongolia
and Turkey, holds its annual meeting in London on May 15 and 16.
Representatives of the bank's member countries, together
with the European Union and European Investment Bank, will
discuss how to deal with the crisis and manage its recovery.
Issues such as a possible capital increase are not expected
to be on the agenda.
One of the EBRD's former recipients of funds, the Czech
Republic, has already graduated from recipient status.
Seven other countries which joined the EU in 2004 --
Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and
Slovenia -- are also due to stop receiving EBRD funds in 2010.
But the current crisis may put those plans on hold. "These
countries have other concerns than the one of when they will
graduate," Mirow said. "Let's cope with the crisis, let's look
what the crisis has done to these countries and how the recovery
looks and then we will discuss when and how."
Mirow said the EBRD had increased its level of commitment in
these seven countries, particularly in the Baltic states, Poland
and Hungary.
The EBRD joined the World Bank and the EIB in February in
launching a 24.5 bilion euro, two-year loan programme for
central and eastern European banks and firms.
"We cannot save the world," said Mirow. "We have to
cooperate with others, this is what we are doing. In a lot of
countries, we can make some difference, I think this is good
enough."
(Reporting by Carolyn Cohn, writing by Sebastian Tong;
editing by David Stamp)
