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Commonwealth Development Bank: $30 million capital injection



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TREASURER

PRESS

RELEASE NO.

EMBARGO

COMMONWEALTH DEVELOPMENT BANK - $30 MILLION CAPITAL INJECTION

The Government has today implemented its promise of a $30 million capital injection to the Commonwealth Development Bank (CDB).

This completes the implementation of the three initiatives which the Government announced in its Investing in the Nation statement to enhance the operations of the CDB. These initiatives comprised:

capital funding of $30 million to allow the CDB to expand its debt and equity financing activities;

a continuing subsidy of $20 million per annum to support the CDB's financing activities;

an expansion of the CDB's charter so that it would no longer be confined to the role of supplementary lender.

In addition to these measures, the CDB has relaxed its internal lending restrictions by increasing its maximum loan size from $2 million to $5 million to enhance its ability to meet the full financing needs of eligible borrowers.

The $30 million capital injection is designed to increase the CDB's capital base and so enhance its capacity to lend to eligible small and medium business enterprises. In return for the capital injection, the Government will be issued with 17,250,000 shares in the CDB, representing 8.1 per cent of the CDB's enlarged capital.

In addition to the Investing in the Nation measures, the Government announced further initiatives with respect to the CDB in its Working Nation statement. These were to:

fund a closely targeted three year advertising campaign, with a maximum cost of $2 million, to promote the CDB more actively; and

encourage the CDB to devote additional attention to the provision of equity finance to small and medium sized businesses.

These measures are designed to enhance small business awareness of the CDB and to encourage the CDB to place greater emphasis on the provision of equity finance to clients where appropriate.

Under the terms of its charter the CDB provides debt and equity funding to businesses (in particular rural producers) when that finance is not available on reasonable and suitable terms and conditions from other sources.

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CANBERRA

30 May 1994.

PARLIAMENTARY I

PARLIAMENTARY LIBRARY MICAH