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| Summary of Project Information (SPI) |
| This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
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| Project number | 24976 |
| Project name | Limited Liability Company Rusfinance Bank |
| Country | Russian Federation |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | Rusfinance Bank LLC |
| Environmental category | C |
| Date SPI disclosed | April 5, 2006 |
| Projected board date | May 5, 2006 |
| Status | Active |
| Previous Events | Signed: November 14, 2006
Approved: July 6, 2006 |
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| Description of company and purpose of project |
The project is to provide a partial credit guarantee and thereby credit enhance a Ruble-denominated bond issue by Commercial Bank Rusfinance Bank Limited Liability Company (Rusfinance Bank or the Bank). The bond issue will be for an expected aggregate of up to RUR 3 billion and with an expected maturity of 2 years. This credit enhancement will be in the form of an IFC partial credit guarantee that would cover all principal and interest payment shortfalls up to a maximum amount equal to 50 percent of the initial outstanding principal amount of the bond.
Rusfinance Bank is a medium-sized regional bank based in Samara, an industrial city situated in the Lower Volga region. The Bank specializes in short to mid term consumer lending, particularly for automobile acquisition. The Bank is present in over 38 regions of Russia, with the portfolio well-diversified between regions.
IFC would enable Rusfinance Bank to tap domestic capital markets to obtain much needed longer term local currency funding with which to further develop its consumer finance business. |
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| Project sponsor and major shareholders of project company |
| Rusfinance is currently 100% owned by Rusfinance SAS, which is in turn fully owned by Société Générale. Rusfinance SAS is the French-holding company for the two Russian-based consumer finance legal entities operated by Société Générale: Rusfinance LLC (the Moscow-based specialized consumer finance operation) and Rusfinance Bank (the Samara-based operation specializing in automobile financing). Société Générale is a top tier corporate and investment bank in the euro-zone. With total assets of EUR 848 billion and equity of EUR 23.5 billion as at December 31, 2005, it is the seventh largest French company by market capitalization. As at December 31, 2005, Société Générale had a market capitalization of EUR 45.1 billion and its stock is widely held with no dominant shareholders. The credit ratings of Société Générale (Moody’s: Aa2; S&P: AA-; Fitch: AA-) reflect the Société Générale Group’s strong financial position, resulting from its excellent commercial operations, diversified income, satisfactory core profitability and strong risk management. In 2004 the institution generated a return on equity (ROE) of 20.1% and in 2005 the return on equity rose to 25.3%. |
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| Total project cost and proposed IFC investment |
| An IFC partial credit guarantee that would cover all principal and interest payment shortfalls up to a maximum amount equal to 50 percent of the initial outstanding principal amount of the bond. |
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| Location of project and description of site |
| The head office of Rusfinance Bank is based in Samara. The Bank has branches in 38 regions throughout the Russian Federation and approximately 15 banking outlets. |
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| Project Development Impact and IFC's Role |
| The project is expected to have a strong development impact by introducing an effective way to foster competition in the consumer finance market in Russia and helping the Russian financial system move towards modern banking practices. An IFC-backed bond would help Rusfinance Bank gain significant visibility in the Russian capital market and serve as an effective vehicle by which to introduce this innovative and fast-growing specialized financial institution to investors. By using its international reputation and bringing solid structuring expertise, IFC would enable an IFC existing client to tap domestic capital markets to obtain longer term local currency funding with which to further develop its consumer finance business. As local investors become more familiar with Rusfinance Bank as a borrower, the institution should be able to issue bonds in the future on its own, which is central to its funding strategy and paramount to its future development. Moreover, the successful issuance of unsecured bonds should allow Rusfinance Bank to consider at a later stage other, more complex, funding options such as securitization. Thus, the project is the first step in providing Rusfinance Bank with a greater variety of funding options and the ability to access a deeper and broader investor base in the future. |
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| Environmental and social issues - Category C |
This is a Category C project according to IFC's environmental and social review procedure.
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| To contact the project company, please write to: |
Jean-Marie Mass, Head
jmasse@ifc.org
Dimitre Mitov, Sr. Investment Officer
dmitov@ifc.org |
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