Magazine article American Banker

European Firms Will Ask U.S. Banks to Help Fund Soviet Development

Magazine article American Banker

European Firms Will Ask U.S. Banks to Help Fund Soviet Development

Article excerpt

European Firms Will Ask U.S. Banks To Help Fund Soviet Development

LONDON - Some prominent European investment banks and professional firms will seek financial support from U.S. banks in setting up a $400 million development bank to help repair the Soviet Union's sagging export economy.

Moscow's planners hope the proposed bank will bring sophisticated American-style project financing techniques to the Soviet Union's creaking financial system for the first time.

A British-based consortium involving Morgan Grenfell & Co., the investment banking arm of Germany's Deutsche Bank AG, as well as law and accounting firms is assembling detailed proposals for the new concern, tentatively called the Soviet Project Finance and Export Bank.

Soviet Turmoil a Problem

Officials of this group acknowledge, however, that the expected split-up of the Soviet Union after the failed coup is overshadowing the project.

"Moscow is in what you could term a period of musical chairs," says John Murphy, a partner in the London law firm of Theodore Goddard, one of the companies centrally involved in the project.

"But this scheme is strongly backed by Gosbank [the Soviet central bank], and we believe we can get it on the road."

Plans call for it to be designed primarily to attract private investment into the Soviet Union and assist in developing the nation's market economy, particularly supporting export industries that would produce much-needed hard currency.

These will be chiefly in the petroleum, farming, and tourism sectors. …

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