|
|  |
| 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. |
 | |
| Project number | 20717 |
| Project name | BOG II |
| Country | Georgia |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | Bank of Georgia |
| Environmental category | FI-1 |
| Date SPI disclosed | April 18, 2003 |
| Projected board date | May 20, 2003 |
| Status | Active |
| Previous Events | Invested: July 25, 2003
Signed: June 30, 2003
Approved: June 13, 2003 |
|
| Description of company and purpose of project |
| The project is to provide a credit line of up to $5 million to the Bank of Georgia (BoG or the bank) for onlending for acquisition, improvement, construction or upgrading of both residential homes and small commercial properties. The credit line will also be made available for onlending to SMEs for working capital and investment purposes. The bank has identified demand for credit by SMEs outside of Tbilisi, where borrowers have very little access to formal financial services. This project is IFC’s second with the Bank of Georgia and will build on the success of a similar credit line extended three years ago. In April 2000, IFC signed a $3 million credit line with the bank, which was used to finance the acquisition, construction and improvement of both commercial and residential real property. This was the first time in Georgia’s history that a credit line was targeted directly at mortgage financing, and satisfied a demand to expand and improve the existing housing stock. |
|
| Project sponsor and major shareholders of project company |
| Bank of Georgia is one of the Georgia’s leading private sector banks and provides a wide range of retail and corporate banking services. BoG was converted into an open joint stock company from a former state housing bank in 1994. It has since developed into a universal bank with a large retail and corporate client base. BoG’s largest shareholders are DEG and EBRD, which collectively own 28% of the bank, the remainder is owned by 1,700 other shareholders, mainly Georgian individuals and a local financial institution. |
|
| Total project cost and proposed IFC investment |
| The proposed IFC investment is a credit line of up to $5 million to be onlent to Georgian individuals and SMEs. |
|
| Location of project and description of site |
| Bank of Georgia is headquartered in Tbilisi and has 52 branches and service centers across the country. |
|
| Project Development Impact and IFC's Role |
The development impact of this project should be high, because it achieves the following objectives:
- Provides financing for the improvement and expansion of the housing stock in Georgia. The housing stock is in need of repair and investment because the upkeep of properties was traditionally the responsibility of municipal governments, which no longer have the resources to fulfill this function. This credit line helps enable private companies and individuals fill the gap left by the state.
- Allow a leading Georgian bank to increase the maturity of its liabilities and thereby better manage its asset and liability position.
- Expand credit to borrowers who would otherwise not have access to financing. This will be particularly true for individuals and SMEs outside of Tbilisi, where the formal financial sector is less developed.
IFC’s role in this project is two fold. First, IFC will be providing longer term funding which is currently scarce in Georgia. This will enable the Bank to extend longer credits without a negative asset and liability mismatch. Second, IFC has designed its financial covenants in this loan to encourage prudent management of credit, currency, and other financial risks. |
|
| Environmental and social issues - Category FI-1 |
This is an environmental review category FI ( Financial Institution) type 1 project. BoG will need to demonstrate that it has an environmental management system that will ensure that commercial real estate investments and SME lending meet the environmental and social requirements of the host country. BoG will be required to apply IFC's Exclusion List to commercial property mortgages and to loans for new construction.
|
|
| To contact the project company, please write to: |
Thomas E. Lubeck
tlubeck@ifc.org
|
|
|
|