European bank president sees challenging times ahead

THE PRESIDENT of the European Bank for Reconstruction and Development (EBRD), Thomas Mirow, met Minister for Finance Brian Lenihan and the National Treasury Management Agency (NTMA) in Dublin on Wednesday.

Set up in 1991 to help former Soviet-controlled countries in central and eastern Europe by lending to or buying stakes in businesses, the EBRD is owned by 61 countries, including Ireland. This year Mr Lenihan is chairman of the bank's board of governors, which prompted the president's visit.

Mr Mirow, a former German deputy finance minister, said eastern European states faced tough times and recession for a number was "already certain".

The EBRD president said the bank has been a partner with Irish companies and banks in a deals worth almost €1 billion.

The Government is an investor with the bank in a carbon fund through which the NTMA buys credits that allow pollution in the Republic to exceed international limits.

Mr Mirow said Irish investors had "very good experiences" investing with the EBRD, but that, if the financial crisis continued for a considerable time, "it is reasonable to assume that there might be a tendency for these companies to focus on their home businesses".

He said the financial crisis had changed the work of the bank, which has syndicated its loans to private banks. "This has proven to be rather difficult in these times."

Mr Mirow believes the bank bailouts across Europe were necessary "to prevent the worst".

"We still do not know what they will do to markets and how the markets will look after these bailouts. Will there be competitive advantages and disadvantages?"

Mr Mirow said the effect of the financial crisis was only now being felt in countries' wider economies. "It will take a while to recover and no one knows how long."