World Bank leads East Europe rescue as fund managers mull region's prospects

A €25 billion rescue package for the economies of central and Eastern Europe has been announced by the World Bank, EBRD and EIB.

The three supra-national lenders will provide the cash to support the region's banks and provide lending for crisis-hit businesses.

Thomas Mirow, president of the EBRD, said the institutions were working together to find practical, efficient and timely solutions to the crisis in eastern Europe. 'We are acting because we have a special responsibility for the region and because it makes economic sense,' he said. 'For many years the growing integration of Europe has been a source of prosperity and mutual benefit and we must not allow this process to be reversed.'

The EBRD will provide up to €6 billion for the financial sector in equity and debt finance, to banks and small and medium-sized enterprises (SMEs). The EIB will provide €11 billion in lending for SMEs, while the World Bank Group will provide around €7.5 billion in support through different arms of its organisation.

World Bank president Robert Zoellick, meanwhile, said Europe must come together to ensure that the achievements of the last 20 years were not lost as a result of the economic crisis. Welcoming the co-operation between the three institutions, he said: I am committed to making this partnership work as we move forward to address the risk of a crisis of the banking sector in eastern Europe.'

Leading fund managers investing in the region have recently offered contrasting views on its short and medium-term prospects. 

Speaking in January, Elena Shaftan of Jupiter Asset Management was among the Russia specialists who remains positive about the country despite worsening newsflow.

She highlighted government stimulus, a more stable rouble and an oil price which could not fall much further as factors which led her to believe that Russia was becoming attractive once again.

Shaftan, who runs four funds in this sector, took the view that ‘the greater part’ of the adjustments in the oil price and the rouble had been played out and genuine value could now be found in the Russian market.