New billions for the EBRD must lead to environmentally and socially 'useful' banking, say civil society groups

With the support of 45 civil society organisations from around the world, CEE Bankwatch Network today presented the European Bank for Reconstruction and Development (EBRD) with a set of proposals that seek to modify the development bank's lending practices to bring about real social and environmental improvements in central and eastern Europe. [1]

The EBRD is currently engaged in a fourth review of its capital resources, and for the 2010-2015 period it is requesting a 50 percent capital increase - an extra EUR 10 billion - from shareholder governments. [2]

Pippa Gallop, interim EBRD co-ordinator of Bankwatch, said: “This level of capital increase request from the EBRD suggests that the bank is in buoyant, expectant mood following its response to the economic crisis, in which it has been credited with saving central and eastern Europe’s banking systems from collapse by lending them billions of euros. However, the short-term apparent success of these emergency transfusions should not divert attention from the long-term questions now surrounding the whole concept of the transition to market economy promoted by the EBRD.

“The crisis has shown the bankruptcy of the idea that promoting the private sector is an end in itself. The EBRD needs to focus on concrete social and environmental goals that will improve people's wellbeing instead of trying to bend everything to fit market criteria.”

Piotr Trzaskowski, Bankwatch’s Energy and climate co-ordinator, said: “The EBRD should be looking to supercharge the transition to a low-carbon economy in the region. The surface of this enormous challenge is barely being scratched in most of the EBRD countries. The EBRD has increased its energy efficiency lending, but can still do more. It lends relatively little for renewables and continues to finance fossil fuel projects, motorways and aviation expansion, thus locking transport and energy systems into unsustainable patterns for decades to come.”

Mark Fodor, Bankwatch's Executive director, said: “The economic crisis has also highlighted the need for the EBRD’s financial intermediary lending to be tightened up to stop socially harmful practices such as foreign currency consumer lending. Around 40 percent of the EBRD’s portfolio currently goes through intermediaries, but the bank does not disclose the final beneficiaries. The public needs to have much more information on where its money is going and what it is being used for.

“The ongoing economic crisis has focused minds on 'socially useless' banking. For a public development bank like the EBRD to be demanding a big new capital injection, it's got to be committing to a much more ambitious social and environmental agenda. Our proposals to the EBRD are too important to fail.”

For more information

Pippa Gallop
CEE Bankwatch Network interim EBRD co-ordinator
pippa.gallop AT bankwatch.org
+385 99 755 9787 (Croatia)

Notes for editors:

1. The proposals to the EBRD, endorsed by 45 civil society organisations, are available in pdf here.

2. A decision on any EBRD capital increase is expected be approved in May 2010 when the EBRD holds its annual meeting in Zagreb; an informal decision could be made by shareholding governments some time before this. For a list of EBRD shareholder governments, see .