Fima Banka

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	27090
Company name	Fima Banka d.d. Sarajevo
Country	Bosnia and Herzegovina
Sector	Finance & Insurance
Environmental category	FI
Department	Global Financial Markets Group
Status	Hold

Date SPI disclosed	May 9, 2008
Projected board date	June 16, 2008

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The proposed project consists of:

- up to EUR 6 million senior loan to Fima Banka d.d. Sarajevo (Fima Banka or the Bank) with a maturity of up to 7 years to support onlending to SMEs, and
- an equity investment of up to 10% of equity of the Bank. Fima Banka is a greenfield bank set up in October 2006 in Bosnia and Herzegovina (BiH). Fima Banka offers a wide range of financial services in corporate and retail banking. The Bank’s vision is to become one of the leading banks in BiH for the SME segment. The proposed project aims to provide much needed long-term financing to support Fima Banka’s lending to SMEs.

Anticipated development impact of the project

IFC’s proposed investment in Fima Banka in BiH will support the SME lending activities of the Bank in the country. BiH is an IDA country and a frontier market for IFC, a primary focus area. Fima Banka’s vision is to become the leading SME bank, and increase its branch network to reach underserved people of the country, who are not using a wide array of banking products. By providing long-term funding to Fima Banka, the proposed transaction will enable penetration into the segment to serve a larger number of SME clients. Through long-term financing, borrowers of Fima Banka will increase long-term sustainability of their operations, and increase their competitiveness. Increased SME lending by the Bank is expected to stimulate employment generation, and IFC’s investment in the Bank will build more confidence in the market. Overall, IFC’s loan and equity investment in Fima Banka will have a high development impact in the country due to its strong support for institution building.

IFC's expected development contribution

IFC’s equity investment will strengthen the capital base of the Bank and the senior loan will enable the Bank to extend long-term financing to its SME clients. IFC’s provision of such long-term credit line will stabilize, diversify and extend the maturity of the Bank’s funding base, which would allow Fima Banka to extend the tenor of SME loans.

Environmental and social issues - Category FI

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.

During appraisal, IFC will analyze Fima Banka's portfolio, for types of transactions, size, tenor and industry sectors and determine the Applicable Performance Requirements for the Bank that would include a combination of:

- The IFC FI Exclusion List, and/or
- The applicable National Social and Environmental Laws and regulations, and/or
- The IFC Performance Standards.

IFC will also review the capacity of the Bank to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in SEMS.

Based on the review, the Bank will be required to:

- Develop an, or upgrade, if necessary, any existing SEMS, prior to disbursement to the satisfaction of IFC,
- Identify responsible, qualified persons to manage and implement the SEMS,
- Commit to implement the SEMS, to ensure that its investments/activities are in compliance with the Applicable Performance Requirements,
-Submit a periodic report to IFC as per a format to be provided by IFC.

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