Bank behind the loan

The EBRD has 62 shareholders

By BBC business reporter Karen Hoggan

The European Bank of Reconstruction and Development (EBRD) granted a £70m loan to steel magnate Lakshmi Mittal, to help his company LNM Holdings buy a Romanian company.

But how does this loan fit in with the workings of the bank?

The EBRD helps former Communist countries in their transition to market economies.

Set up in 1991 following the collapse of Communism in eastern Europe and the Soviet Union, the bank has 62 shareholders.

The biggest is America and Britain is joint second.

These shareholders have contributed or pledged about £12bn to the bank.

Interest rates

Because it has such solid financial backing the EBRD can borrow large sums on the world's capital markets at very favourable rates.

The bank has solid financial backing

And it is this money which is then lent at commercial rates to companies wishing to set up business in the countries in the Balkans, Central Asia and central Europe which the bank is there to help.

There are 23 bank directors and bigger countries like Britain have their own.

Approval likely

The directors receive a briefing and recommendation from their governments on how to vote on every project.

Ministers normally become involved only if the proposal is controversial.

In the case of the £70m loan to LNM Holdings, civil servants at the Department for International Development advised the British director John Kerby to give it the go ahead.

America was against but because the bank operates on majority voting the loan was waved through.

Even if Britain had voted against it would still have been approved.