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The Government of the Republic of Serbia

In the service of citizens

Contract on recapitalisation of Cacanska Banka signed

Belgrade, 25 September 2006

Serbian Minister of Finance Mladjan Dinkic and Director of the European Bank for Reconstruction and Development's (EBRD) Belgrade office Dragica Pilipovic-Cefi signed today a contract on the recapitalisation of Cacanska Banka, by which the state and the EBRD have become the bank's majority shareholders.

At a press conference following the signing Dinkic said that Serbia used to own 51.7% of shares in Cacanska Banka and around 30% of shares were for sale at the Belgrade Stock Market.

He stated that the EBRD will recapitalise Cacanska Banka with €15 million and thus gain 25% of the bank's shares. He said that the price is 2.1% higher than the book value of the bank's capital, adding that thanks to the recapitalisation the bank's capital will now amount to around €40 million.

According to Dinkic, Cacanska Banka is a solid bank and is doing a very good job having in mind that its capital stands at €21.2 million and assets at €51.4 million.

Also, the bank grants loans for small and medium-sized enterprises based on the EBRD's €5 million credit line. In the course of 2006, it increased citizens' foreign currency savings by 16% and in the first half of the year made a profit of €1.4 million, said Dinkic.

He explained that according to the contract, Serbia remains the majority owner of Cacanska Banka with around 39% of shares, while the EBRD is the second majority shareholder with 25% of shares, adding that together they own a controlling block of shares.

Dragica Pilipovic-Cefi, left, and Mladjan Dinkic sign the contract

Dinkic stressed that the aim of the recapitalisation is to develop Cacanska Banka and improve its corporate management within a year or two, after which period Serbia and the EBRD will decide on the way the bank's shares will be offered for sale at the market.

He said that the recapitalisation will make Cacanska Banka a much more competitive market player and a stronger partner in the banking market.

Pilipovic-Cefi stressed that according to the EBRD, the banking sector is one of the best sectors in Serbia and Cacanska Banka one of the strongest regional banks.

Pointing to the successful cooperation between EBRD and Cacanska Banka, she explained that the purpose of the recapitalisation contract is not only to strengthen this bank, but to attract long-term funds into the economy of this region.