To support the reconstruction of Serbia’s economy, in 2002 KfW, the German Ministry of Development Co-operation and other donors launched the European Fund for Serbia (EFS). The EFS is a revolving fund, whose financial resources are on-lent to selected Partner Banks on the basis of credit agreements. The Partner Banks in turn extend working capital and investment loans to SMEs, assuming the full credit risk for these loans. Through accompanying consultancy, training and portfolio monitoring services, the EFS developed and strengthened the capacity of the Partner Banks.
In June 2005, the fund co-operated with four domestic private banks. LFS was responsible for the strategic implementation of the EFS. This implied the provision of advisory services to Partner Banks, as well as the monitoring of their performance. LFS also advised donors on business policy, procedures, and the future financing of the EFS.