IMB WHL

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	26026
Company name	CJSC "International Mortgage Bank"
Country	Ukraine
Sector	Finance & Insurance
Environmental category	C
Department	Global Financial Markets Group
Status	Active

Date SPI disclosed	August 10, 2007
Projected board date	September 13, 2007
Previous Events	Invested: February 7, 2008 Signed: December 14, 2007 Approved: September 20, 2007

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The proposed project involves an IFC’s minority equity investment and long term funding to IMB Group, to support its residential housing finance lending program. IMB is the only full service commercial bank in Ukraine whose primary focus is the residential mortgage market. Since inception, the Bank has issued over $66million of first lien mortgages in Ukraine and now captures approximately 10% of the Kiev capital region residential mortgage market in terms of disbursements, specializing in originating and servicing residential mortgages to individuals. IMB has ambitious plans to scale up its mortgage operations to help address the deficiency in the Ukrainian market. In addition to the residential mortgage business, IMB has a growing business providing point of sale consumer loans, credit cards and other consumer financing to the Ukrainian market. At year end 2006, these consumer loans accounted for 24% of its loan portfolio.

Anticipated development impact of the project

The Ukrainian financial market is underdeveloped and individuals lack access to mortgage loans, in particular access to affordable long-term loans. By providing long term funding, the proposed project will enable the Bank to grow its origination volume, which, in turn, will increase market competition and lower the cost of mortgage loans, making the purchase of homes more affordable to a larger number of consumers. Moreover, the project will enable IMB to continue to extend mortgage financing to previously underserved groups. By providing increased sources of financing to the domestic population, the project will help to address the country’s housing deficit, and enable the purchase of homes by a large section of the low and middle-income population segment. The project’s development impact is noteworthy as housing finance contributes to social stability by enabling households in these income segments to purchase an asset that will represent their largest single investment.

IFC's expected development contribution

- Impact on the primary mortgage market:

The loan will support IMB in its efforts to issue a mortgage backed security which will deepen access to alternative financing for the primary mortgage market. There will be a more robust primary market practice and a healthy credit evolution resulting in lower and sustainable NPLs as origination criteria is important to have access to finance in the secondary markets.

- IFC’s global expertise:

IFC’s value addition is significant when considering its experience in projects in comparable economies which included setting up and developing business models to prepare banks/FIs for securitization in order to tap suitable long-term funding; and global knowledge of key products and success criteria’s in the mortgage market.

- Impact on other potential transactions:

IFC's involvement will help introduce standardized documentation and refined and transparent credit processes and thus will form an excellent platform to set the benchmark for increasingly cost efficient market.

- Impact on the mortgage and capital markets:

The introduction of improved origination criteria will help improve the credit processes and over time lead to lower and sustainable NPL’s.

Environmental and social issues - Category C

This project is engaged in the business of mortgage and consumer finance, and has been classified as a Category C project according to IFC’s Environmental and Social Review Procedure. The project is required to inform IFC in the event of any change in the nature or scope of its contemplated business or operations.

IFC PROJECTS