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| AlbaniaMortgFac |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment 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. |
| Project number | 25550 |
| Company name | National Commercial Bank Sh.A. |
| Country | Albania |
| Sector | Finance & Insurance |
| Environmental category | C |
| Department | Global Financial Markets Group |
| Status | Completed |
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| Date SPI disclosed | January 12, 2007 |
| Projected board date | February 16, 2007 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
The proposed transaction consists of:
- a mortgage loan facility of up to EUR50 million to a group of pre-selected domestic commercial banks (the Banks) in Albania, including Banka Kombetare Tregetare (BKT) for up to EUR20 million and Banka Popullore (BP) for up to EUR10 million;
- a capacity building and technical assistance program to focus on supporting the mortgage lending activities of the Banks; and
- an advisory program on improving specific aspects of the regulatory framework for the housing sector in Albania, which will be designed in close consultation with the Albanian authorities.
The purpose of this the Facility is to provide the much needed long term funding to the mortgage market in Albania, to support the Banks’ growth strategies and reduce the systemic risks that arise from a mismatching between assets and liabilities. Consistent with the purpose of the transaction, the facility will have a maturity of up to 15 years, including a two year grace period for the repayment of principal. |
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| Project sponsor and major shareholders of project company |
BKT is an existing client of IFC and is the second largest commercial bank in Albania, with total assets of $683 million and equity of $38 million as of end-June 2006. With more than twenty branches in the country, BKT services the financial need of small businesses and middle size companies, real estate entrepreneurs, public corporations and individual customers.
BP is a newly-established, locally owned bank in Albania. Headquartered in Tirana, it was established on March 2004, with the participation of 30 Albanian businessmen. With more than 270 employees the BP offers banking services to its retail and corporate customers through a country-wide network of 27 branches. As of end-June 2006 the bank had total assets of $220 million and equity of $15 million. |
| Total project cost and amount and nature of IFC's investment |
| The proposed IFC investment is a facility in the amount of EUR50 million in the form of A loans for IFC’s own account to be made available to pre-selected banks in Albania. |
| Location of project and description of site |
| The Banks selected for the facility are headquartered in Tirana and have branches in various locations in the country. |
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| Anticipated development impact of the project |
The project is expected to have a high development impact in the following areas:
Increased access to housing:
By providing long term funding, the facility will increase the affordability of home purchase, thus promoting home ownership in the country, as well as providing financing for house renovation. Furthermore, through linkage effects, the development of the housing industry will stimulate the supply of labor and materials for the construction and improvement of homes, thus contributing to the overall economic growth in Albania.
Development of the Housing Finance Sector:
Consistent with the IFC’s strategy, the project presents an opportunity to promote the development of the primary mortgage sector in Albania by:
- providing the much needed long term funding to the banking system,
- raising the mortgage underwriting standards in accordance with the best industry practices; and
- strengthening of the institutional capacity of the regulator.
Strengthening of Financial Sector:
The successful implementation of this project will develop financial intermediation by:
- increasing the range of products and services available in the market; and
- assisting the borrowing institutions in becoming more efficient providers of financial services.
Demonstration Effects:
IFC’s involvement will help bring credibility to the country’s growing mortgage finance sector and will facilitate attracting long term funding from other sources. |
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| IFC's expected development contribution |
The proposed project fits well with the strategic objectives of IFC and the World Bank Group as it will support the development of the housing finance sector and increase the financial intermediation in the economy.
IFC’s developmental contribution is two-prong:
- IFC's growing and successful experience in the housing finance sector will ensure that the best international housing finance practices are incorporated in both the Banks’ mortgage operations and the regulatory environment through properly structured technical assistance.
- IFC’s longer term funding will extend the maturity of the mortgage loans available in Albania and will further stabilize and diversify the funding base of the country’s financial sector. |
| Environmental and social issues - Category C |
| This is a Category C project according to IFC’s environmental review procedure. The Banks will be required to adhere to IFC’s exclusion list. No further environmental review is required. |
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| For inquiries about the project, contact: |
For Banka Kombetare Tregetare:
Seyhan Pencapligil, CEO
Telephone: +355 4 250 955
Fax: +355 4 250 954
For Banka Popullore:
Edwin Libohova, General Manager
Telephone: +355 4 272788 |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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