European firms will ask U.S. banks to help fund Soviet development.

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.

Andersen Doing a Study

The accounting firm Arthur Andersen & Co. is also involved in a feasibility study of the proposed banking institution. Also working on the study is Prof. William Butler of University College, London, an expert in Soviet business law. The study has been backed by the $80 million British Know-How Fund for the Soviet Union.

If this preliminary survey proves out, application will be made to the administrators of the European Community's $500 million development aid package for the Soviet Union to help provide the initial capital for the venture.

Mr. Murphy says a formal request to the E.C. for assistance needs to be made by mid-September "so we are working against deadlines to get all the groundwork laid."

Looking Far Afield

While support for the proposed institution will come extensively from Europe, significant shareholders will be sought in North America and Asia to participate as joint-venture partners in the bank, whose start-up capital will be about $400 million, the consortium officials said.

"We will be looking to U.S., Japanese, and European banks, and other types of financial organizations, to join in as shareholders," Mr. Murphy said.

Major sponsors for the slated bank include the European Bank for Reconstruction and Development, the $13 million institution with headquarters in London that has been established to assist Eastern Europe and the Soviet Union.

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