UK’s Suma Chakrabarti Elected To Head EBRD
The European Bank for Reconstruction and Development, which invests as much as 11 billion euros ($14 billion) a year in nations from Russia to Egypt, met with credit flows again threatened by a resurgent euro crisis.
Shareholders elected Suma Chakrabarti, permanent secretary at the U.K. Justice Ministry, to head the London-based bank for the next four years. The 63 countries that own the EBRD with the European Union and the European Investment Bank are today due to approve 1 billion euros of lending to new democracies in the southern and eastern Mediterranean this year.
The EBRD has led efforts to avert a banking-industry collapse in Eastern Europe, which was hardest hit by the global financial crisis that followed Lehman Brothers Holding Inc.’s 2008 demise. It has warned of renewed contagion risks as concern about Greece leaving the euro endangers funding from the western European banks that dominate lending in the region’s east.
“Given the Greek risk, euro-zone banks will probably be reluctant to increase their exposure to emerging Europe,” William Jackson, an economist at London-based Capital Economics, said yesterday by phone. “At best it looks like they’ll have a slow, gradual deleveraging from the region. This will be quite troubling for growth in several economies.”
Chakrabarti won the first competitive leadership vote in the EBRD’s two-decade history, displacing incumbent Mirow, 59, who was bidding for a second term at the helm. The EU, which has chosen all five EBRD heads to date, failed to back a single candidate at a May 14 meeting in Brussels.
Other challengers were France’s Philippe de Fontaine Vive Curtaz, vice president at the European Investment Bank, ex- Polish Prime Minister Jan-Krzysztof Bielecki and Bozidar Djelic, a former deputy premier of Serbia.
Created in 1991 to support the transition of Eastern Europe’s former communist nations to market-driven democracy, the EBRD has invested 71 billion euros in the last two decades.
Tunisia, Egypt, Morocco and Jordan are in line to become recipients under its expansion plans, with resources allocated to that region to reach as much as 2.5 billion euros a year this decade in addition to 8.5 billion euros a year invested in eastern Europe and central Asia, Bloomberg reported.
