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| KhMB |
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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 | 24851 |
| Company name | Khanty-Mansiysky Bank |
| Country | Russian Federation |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Dropped |
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| Date SPI disclosed | March 15, 2007 |
| Projected board date | April 19, 2007 |
| Previous Events | Approved: May 22, 2007 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
The project consists of a pre-privatization equity investment for a 12,5% (plus one share) shareholding in JSC Bank of Khanty-Mansiysk (KhMB or the Bank), a leading Russian bank headquartered in Khanty-Mansiysk Autonomous Okrug – Yugra (Autonomous Okrug) of the Russian Federation.
This investment would be the first step in the planned privatization of KhMB and will assist the Bank in achieving its strategic objectives. The pre-privatization investment fits well within the privatization framework of the government of the Autonomous Okrug. |
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| Project sponsor and major shareholders of project company |
| KhMB was established in 1992 and is currently almost fully-owned (approx. 93%) by the Autonomous Okrug government, as represented by the State Property Department. With total assets of RUR 68.5 billion (approx. US$2.6 billion equivalent) at end-2006, KhMB ranks among the country’s 30 largest banks. The Bank operates as an open joint-stock company on the basis of a general banking license and has a traditional commercial banking profile. |
| Total project cost and amount and nature of IFC's investment |
| IFC and the European Bank for Reconstruction and Development will together acquire 25% plus two shares of the share capital of the Bank on a pari-passu basis. |
| Location of project and description of site |
| KhMB is headquartered in Khanty-Mansiysk, Russian Federation, and operates through approx. 16 branches, 71 sub-branches and operating cash desks, and 2 rep-offices in Yekaterinburg and Prague. |
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| Anticipated development impact of the project |
The overall banking penetration in Russia remains low, especially in the regions outside Moscow, and the market continues to be dominated by state-owned banks. In view of this, the World Bank has long been encouraging reduction of the role of state banks for the Russian banking sector, including those owned by regional governments. Thus, by supporting the privatization of one of the country’s leading regional banks, IFC’s developmental impact is expected to be particularly high. Specifically, the project will:
- streamline and accelerate KhMB’s privatization, thus contributing to the further development of the Russian banking sector, especially as it regards the regions; and
- increase KhMB’s attractiveness for investors and prepare the Bank for an IPO by strengthening its operational profile. |
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| IFC's expected development contribution |
IFC’s development contribution to the project is two-fold:
IFC has successfully supported high profile bank privatizations in several of Europe's transition economies. The project will therefore build on this success and lend credibility to the KhMB transaction within the context of the local government's privatization program.
By strengthening KhMB’s institutional capacity and enhancing its operational profile, the project is expected to catalyze increased investor interest and improve the terms and conditions of the Bank’s privatization.
These critical elements of IFC’s contribution to the project will lay out the foundation for a successful privatization of KhMB. |
| 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.
Prior to the investment, IFC will determine the Applicable Requirements, if any, that would include a combination of:
The IFC FI Exclusion List and
The applicable National Social and Environmental Laws and regulations and
The IFC Performance Standards
IFC will also review, if required, the capacity of the FI 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 the SEMS.
Based on the review, the project will be required to:
- Develop an, or upgrade, if necessary, any existing Social & Environmental Management System (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 Requirements;
- Submit a periodic report to IFC as per a format to be provided by IFC. |
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| For inquiries about the project, contact: |
Dmitry Smirnov
Director International Business Department
Third Str. Yamskogo Polya, 32, Moscow 125124, Russia
+7 (495) 221 18 22
+7 (495) 609 61 40 |
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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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