IFC Investment to Promote Climate Finance in Serbia, Greening the Financial Sector

Belgrade, Serbia, December 27, 2022—Smaller businesses in Serbia will have increased access to financing, especially for green projects, with a loan of up to €50 million provided by IFC to AIK Banka A.D., leading domestically owned bank. The aim of this new partnership is to increase access to financing for SMEs and also develop a new offering of climate financing products in Serbia.

IFC's investment will support the expansion of the bank's lending program to small and medium enterprises (SMEs) and at least 20 percent of the financing will be earmarked for climate loans.

"We are excited to open a new chapter of our development by entering this partnership agreement, especially since it will give us an opportunity to boost our ESG agenda. AIK Banka is pursuing growth in a responsible and sustainable manner, supporting the development of local economy for more than 45 years," said Jelena Galic, Chairperson of the Board of Directors at AIK Banka. "This partnership will enable us to strengthen and further enhance our support to SMEs in their transition to sustainable future."

SMEs dominate the Serbian business economy, accounting for 99 percent of all firms. Yet, according to the MSME Finance Gap Report, the overall SME financing gap in Serbia is estimated at $7.59 billion, equivalent to 14 percent of the gross domestic product (GDP).

Against this backdrop, about three-quarters of SMEs in Serbia are seeking to finance green projects to enhance future resilience. However, they continue to face barriers, including lack of capital, insufficient skills and information about green technologies and financial products, among others. In response, IFC's loan will help meet this growing demand for green finance.

"We are pleased to enter this long-term partnership with Serbian-owned AIK Banka, with the view to further support the bank's expansion as a competitive and best-practice regional player," said Ary Naïm, IFC's Regional Manager for Central and Southeast Europe. "This operation will help AIK Banka diversify its lending portfolio and respond to increased needs for financing from SMEs in Serbia, in particular for investments in the green transition."

In addition to providing financing, IFC has been working with AIK Banka to help the bank establish its framework for Environmental, Social, and Governance (ESG) management, and better assess climate risk in its portfolio.