Why should my company prefer BSTDB?

Four main reasons should make a company in the Black Sea region prefer BSTDB: speed of decision-making, loan size, competence of the staff and absence of a "political agenda".

Though BSTDB follows international standards in its procedures, the Bank is smaller than other international financial institutions (IFIs) and, thus, able to respond more quickly to a business proposal. While the approval of most projects takes around six months, BSTDB has been able to process and approve some financings in less than four months.

A second reason is that BSTDB is flexible, i.e. able to process projects, especially in its smaller member countries, under the 5 million US dollars limit applied by many other IFIs.

The third reason to undertake an operation with BSTDB is the quality of its staff. The project teams, staffed by professionals with extensive banking experience, blend international and local expertise and are closely involved with the Black Sea countries.

Finally, the Bank has no political agenda or political or macroeconomic policy conditions attached to operations. The Bank was created by the countries of the region to promote economic activity and regional cooperation. 

Is there any economic activity excluded from BSTDB financing?

BSTDB follows the general rules of International Financial Institutions in this respect. In general, and as a part of the negative list, the Bank cannot finance projects that are environmentally harmful and/or linked to the production of military equipment, narcotics, tobacco and products derived from hard alcohol.( However, BSTDB can finance the production of beer, wines and other products with a moderate  alcoholic content). BSTDB's full Negative List of Products is available at www.bstdb.org.

Is there any limit to the amount that BSTDB can lend?

There are two main limitations. BSTDB, like other International Financial Institutions, in principle does not finance more than 35% of the total project cost. The Bank also has a loan ceiling for each individual project (the single obligor limit), which, at present, is approximately 38 million US dollars, subject to periodic revision. As far as the lower limit is concerned, the BSTDB shows flexibility in meeting the demands of its clients in the region, many of them being small businesses. Therefore, the Bank may consider financing starting from a few million US dollars, which is a lower limit than that offered by other IFIs. Even smaller loans may be provided through cooperating financial intermediaries (local banks) in member countries.

What is the approval procedure for BSTDB financing?

BSTDB follows internationally accepted standards in its project cycle. After a project proposal is presented to the Bank and initially screened, the concept is cleared by the Bank’s Credit Committee. Then, after appraisal and due diligence, the Credit Committee undertakes Final Review and, if approved, sends the operation for final approval to the Board of Directors. Once this approval is obtained, the loan agreement can be signed, followed by the disbursement of the loan. The same approval procedure applies for credit lines to financial intermediaries.

How long does it take from the project proposal to the signing of a loan?

BSTDB proceeds as quickly as possible, depending on the quality of information obtained from the client, the capacity of the client, the complexity of the project itself and the risk involved. In general, the Bank aims for 3-6 months. However, the Bank will not proceed with financing until it is completely satisfied with all appropriate information and the legal documentation is fully verified.

What is the pricing of a BSTDB loan?

The pricing and the terms of a loan are subject to individual appraisal. As with other institutions, pricing of an operation depends upon the cost of funds, a margin to cover costs, and a risk margin. As for fees and commissions, the Bank normally requires a front - end fee and a commitment fee. Following international practices, BSTDB may also request other fees depending on circumstances, such as an appraisal fee, a syndication fee, a management fee, etc.

What security does BSTDB require?

A standard commercial security package, including - but not limited to - a pledge of shares, assets, bank accounts, etc., is generally required, while the Bank may also accept an offshore security. For certain low risk transactions, financing may be provided unsecured, but this is an exception, not a rule. The Bank does not normally seek a sovereign guarantee, but certain projects - particularly where state owned entities or official agencies are involved and the nature of the operation may generate general economic benefits but not a direct financial return- may require such a guarantee.