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| 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. |
Summary of Project Information (SPI) |
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| Project number | 9780 |
| Project name | Victoriabank, Moldova |
| Country | Moldova |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | Victoriabank |
| Environmental category | FI |
| Date SPI disclosed | October 19, 2000 |
| Projected board date | November 30, 2000 |
| Status | Completed |
| Previous Events | Invested: November 30, 2001
Signed: September 4, 2001
Approved: May 10, 2001 |
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| Project sponsor and major shareholders of project company |
The recepient of the creditline, Victoriabank, was established in 1989 as one of the first private commercial banks in the former Soviet Union. The Bank was reorganised in 1995, and over 60% of the shareholding was bought by foreign investors. Victoriabank offers traditional commercial banking activities to private companies and retail customers. It has a full banking licence, which enables it to perform foreign exchange operations and participate in trading with government securities.
As of August 2000, Victoriabank had 180 shareholders. Of these, 14 were companies or legal entities and 166 were individuals. The largest individual shareholder is the Bank's President who holds approximately 5% of the shares. The largest shareholder, the Danube Fund (23%), is an off shore limited liability fund based in Cyprus, which is sponsored by Alpha Credit Bank of Greece, EBRD, IFC and others. The second largest shareholder is EBRD holding 15% of the shares, and Alpha Bank Romania, a subsidiary of Alpha Credit Bank of Greece, which holds 13%. Lr. Uniune, a local investment fund, holds 8% of the shares. |
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| Total project cost and proposed IFC investment |
| The total project cost is estimated at US$3 million, financed entirely by IFC as a straight A Loan for IFC's own account. |
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| Location of project and description of site |
| The head office of Victoriabank is located in Chisinau, Moldova. The Bank has 9 branches in all major business centers of the country. |
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| Description of company and purpose of project |
Victoriabank's main focus is corporate banking and it focuses on private sector companies, mainly micro, small and medium sized, involved in trading and export-oriented manufacturing. Victoriabank is the only issuer of international VISA cards in Moldova. The Bank is the second largest bank in Moldova with superior profitability and provides services to nearly 3,000 corporate clients in Moldova.
The purpose of the credit line is to provide term finance to small and medium sized enterprises (SMEs) located in Moldova, for whom funding is scarce, and thereby promoting private investment.
The developmental impact of the proposed project is potentially high in that it provides:
- Support for SMEs: SMEs are key to Moldova’s continued economic growth, yet their potential is not being realised due to scarcity of funding. This funding gap is particularly acute at present due to the shortage of alternative sources, such as leasing or factoring; and the preference of many banks for larger borrowers. Victoriabank is one of few banks actively providing term finance in this sector, yet faces market demand in excess of its current funding resources.
- Institution Building: IFC’s provision of term funding would extend the maturity of, further stabilise, and diversify the Bank’s funding base; while the associated financial covenants would help ensure that the bank maintains appropriate portfolio diversification and a prudent risk profile.
- Banking Sector Liquidity. The 1998 banking crisis and overall emerging market turmoil harmed the liquidity of the banking sector. This proposed project will help mitigate any future crisis.
The role of IFC, apart of the important role as provider of finance, is that of promoting prudent internal guidelines for risk taking by the imposition of stringent financial covenants. |
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| Environmental and social issues - Category FI |
This is a Financial Intermediary (FI) Type 2 project according to IFC's environmental and social review procedure. Victoriabank will adopt an environmental management system to ensure that sub-borrowers comply with national environmental, health and safety standards and with IFC's environmental and social safeguard policies. Victoriabank will provide IFC with an annual environmental report. Any Category A subprojects must be subject to prior review and clearance by IFC's Environment Division, and must comply with World Bank Group EHS Guidelines.
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| Not applicable. |
| To contact the project company, please write to: |
| mzacho@ifc.org |
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