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Getting under the EBRD umbrella, however, can take time. On average, a project takes six months to clear the bank's internal procedures, but it can take a lot longer — approval for one $24 million water-treatment project in Slovenia took five years. Such delays are a source of frustration for the bank's co-financiers. Says a Vienna-based banker, "The red tape is terrible."
Indeed, the faltering transition of parts of post-communist Europe seems to have taken a toll on the EBRD itself. When it started lending in 1991 under the direction of flamboyant French economist Jacques Attali — who resigned two years later following an outcry over how much the bank had spent on its swanky headquarters — some observers then believed that the transition to market-based economies would be a straightforward task for the countries in the region, accomplished within a decade, after which the bank would be redundant. With this brief life expectancy, the bank attracted young recruits from the commercial world, keen to cut their teeth in East European banking before moving on.
Now the bank may instead be drawing careerists, keen to set themselves up in the EBRD's comfortable London premises. But with the realization that transition may take at least a generation or more in some areas, the EBRD wants to revamp itself. The bank now emphasizes decentralization, sending bankers into the field to find projects and work at the grass roots level. In 1999, the proportion of staff in the field, as opposed to headquarters, grew to 34% from 29% in 1998. Still, the bureaucracy can be frustrating to EBRD staff, especially those who joined from the commercial banking world. "Sometimes you feel like blowing the top off," laughs Reinhard Schmalz, EBRD director of marketing business development.
The EBRD management registers these complaints but notes that, while it functions as a commercial bank in some respects, its mandate requires it to act as no other commercial bank would. Every project, for example, is examined for its environmental impact. Lemierre insists, too, that the EBRD is not risk-averse — indeed, the bank wants annual loan disbursements to rise to $2.6 billion, up from the current average of $1.7 billion. Amid all the talk of grand objectives, however, it is the small-business finance plans that could best fulfill the EBRD's mandate of promoting change while making a profit. In Russia, says sme chief Wallace, the loans in her area have a 99.7% repayment rate. "You have a much better chance of doing good banking with the little guys," says Wallace. In a wry tone, she adds: "Big guys can buy courts — they don't necessarily feel the need to repay."
That was one of the lessons EBRD's management had to learn the hard way. The transition to market capitalism has proved more difficult than the bank's founders expected. The good news is that both the bank and its potential clients are beginning to understand that the EBRD's task in that transition is far more complex than just sitting in a marble-paneled building in London doling out mega loans.