Thomas Mirow launched a robust defence of the bank’s role during the crisis following a demand by Czech President Vaclav Klaus that it should be shut down.
In an interview with Emerging Markets, the EBRD president said the bank had a “good track record” during the financial crisis of 2008 and 2009.
Last week Klaus, a long standing critic of the bank, dismissed the EBRD as an unimportant institution. “In my opinion it should not exist at all,” he said.
But Mirow said Klaus was in a “clear minority”, adding: “I think we all know and respect the Czech president and he should stay with the opinion that he has always had.”
He cited the bank’s role in helping Georgia tackle the “double challenge” of a political crisis with Russia and a threat to its banking system.
“There are so many examples which are obvious that we are not in a position where we have to defend our case,” Mirow told Emerging Markets.
He said the EBRD’s intervention to stabilise the banking system in central and eastern Europe meant the worst-case scenarios “did not materialize”.
The EBRD put together the E25 billion Vienna Initiative with private banks and other multilaterals to ensure Western banks did not withdraw capital from their eastern subsidiaries.
“The Vienna Initiative was created - successfully I think - to prevent an unorderly down-wind of western banks in the region and this indeed did not happen,” he said.
The success bolstered morale at the bank after last year’s meetings when some shareholders criticised the bank for not acting more swiftly.
The Board of Governors is this afternoon expected to approve a proposal to inject E10 billion into the bank’s capital base.
Mirow said the decision of the bank’s directors to recommend a “remarkable” 50% increase in its E20 billion capital base was a sign of support.
“This would not have happened if the assessment [was] that we are not able to make a difference,” Mirow said.
Joachim Schwarzer, Germany’s executive director, said the EBRD had played an “indispensible role”. “We have fulfilled a role which we have been asked to play by leaders in the international community, which is helping to stabilise the economy in our region,” he told Emerging Markets.
The US Treasury said the EBRD had played an essential role and provided “particularly critical support” to regional financial institutions. “We expect and look forward to reaching agreement among the governors in Zagreb on how best to position the EBRD to serve the needs of the region going forward,” a spokesperson said.
However the intervention has not led to an increase in lending. Earlier this year the EIB and World Bank warned that many countries still suffered a “contraction in credit”.