New chief announces overhaul at EBRD

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JACQUES de Larosiere, the new president of the European Bank for Reconstruction and Development, yesterday announced a radical shake-up of his institution and admitted the bank was redefining its role after more than two years of upheaval.

Mr de Larosiere, who was appointed president in September after the departure of Jacques Attali, said the development and merchant banking arms of the bank will be scrapped in favour of a 'country focus'. Each of the 25 states in Eastern Europe and the former Soviet Union will be served by a single country team, with the assistance of sectoral expertise in areas such as energy, privatisation and banking. The shake-up, which is accompanied by a productivity and cost-cutting drive throughout the bank, will lead to fewer than 50 redundancies out of 703 staff.

The president said he was also canvassing the views of shareholders on the future role of the bank, set up in 1991 to assist the transition of Eastern bloc countries to market economies. The review will ask: 'What do you really want? What should we really be doing?', Mr de Larosiere said, in what seemed a careful attempt to ensure Western governments shared responsibility for changes at the bank.

Mr de Larosiere's approach to shareholder relations contrasts sharply with the stance taken by Mr Attali, who frequently clashed with his board. The review follows difficulties experienced by the bank in distinguishing between private and public sector projects in some countries. The EBRD has also been criticised for duplicating the work of other institutions in the region.

Mr de Larosiere said it was essential the EBRD played a 'catalytic' role in developing projects that might otherwise founder.