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| Belarusky Narodny Bank |
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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 | 28582 |
| Company name | Belarusky Narodny Bank |
| Country | Belarus |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Pending Approval |
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| Date SPI disclosed | September 22, 2009 |
| Projected board date | October 30, 2009 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
The project involves the purchase of an equity stake of up to 20% in Belarusky Narodny Bank (“BNB”) and a senior loan for SME finance of up to $5 million; a GTFP line in an amount to be determined may also be a part of IFC’s financial package. IFC’s existing client, Bank of Georgia, (“BoG”) has purchased a controlling stake in BNB, with a plan to transform the limited existing operations into an SME bank. BoG and the existing minority shareholder would participate in a new share issue to expand the Bank and meet new regulatory capital requirements for banks operating in Belarus.
For BoG, Belarus represents an opportunity to expand outside of its home market (where it is the largest bank) into a growth market, and in particular, one with a limited SME banking market. Since the Belarusian economy is 5-times larger than Georgia’s and yet much more limited in the development of SME banking, the opportunity has great potential for BoG.
BNB is a small Minsk-based bank with CAR of over 50%; Tier 1 equity is over 50% of assets. The bank has historically turned a small profit by serving a small number of Belarusian companies, most of which would be considered medium-sized or even small enterprises. |
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| Project sponsor and major shareholders of project company |
BoG, the Project Sponsor, is the largest private bank in Georgia with assets of approximately $2 billion and equity of approximately $400 million, including the consolidated balance sheet of BNB. BoG’s financial condition suffered after the August war with Russia, and BoG received extensive support from IFC, EBRD and other IFIs, including an IFC investment of approximately $50 million in subordinated debt and $50 million in senior debt.
BoG owns 70% of BNB shares, with the remaining 30% being held by Mr. Leonid Medved. |
| Total project cost and amount and nature of IFC's investment |
| Total Project cost will be estimated after determining final valuation and percentage of the equity stake, which preliminarily is sought to be up to 20% in BNB, in addition to a senior loan for SME finance of up to $5 million and a GTFP line in an amount to be determined in order support BNB’s SME service capabilities. |
| Location of project and description of site |
| BNB is headquartered in Minsk and has 4 service centers located primarily in Minsk |
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| Anticipated development impact of the project |
| The primary development impact of the Project is to deepen the market for SME lending in Belarus by facilitating the entry and growth of a competent banking group through a South-South investment. SME development and the development of the private sector remains low in Belarus given the dominance of the state sector. |
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| IFC's expected development contribution |
| BoG highly values the IFC ‘brand’ in Belarus, as one of the few international organizations with a long track record in the country. In addition, IFC’s SME advisory work and banking investments in the country are expected to add value to BNB’s ramp-up of operations. As a respected international investor, IFC’s brand can help to reinforce the image of a bank from a small, less-developed economy (but with a highly professional banking sector). |
| Environmental and social issues - Category FI |
As a new client with a limited track record of S&E risk management the appraisal will focus on BNB's capacity to develop and implement a Social & Environmental Management System (SEMS). IFC will explore the potential role BoG can play to support SEMS development. As an existing client, BOG has an ESRR of F2-Moderate, is in compliance with IFC's S&E requirements, has developed an SEMS, provided IFC with the required documentation and reported regularly.
The appraisal will also focus on BNB's labor practices according to IFC's Performance Standards 2: Labor and Working Conditions. Special emphasis will be given to freedom of association issues in the context of concerns raised by international trade unions in previous IFC projects in Belarus (A1, Rubliovskiy, Strominvest/Erilia) regarding restrictions to freedom of association in the country. |
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| For inquiries about the project, contact: |
Constantin Tsereteli
Acting CEO
87a Nezalezhnasty Ave.
Minsk 220012 Belarus
Ph: +375 17 2801683, Fax: +375 17 2807447 |
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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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