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| Inecobank II |
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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 | 26681 |
| Company name | Inecobank |
| Country | Armenia |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Pending Signing |
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| Date SPI disclosed | June 19, 2008 |
| Projected board date | July 21, 2008 |
| Previous Events | Approved: November 12, 2008 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| The project is to provide a senior loan of up to $3 million to Inecobank (or the Bank), a small Armenian commercial bank. The IFC loan will broaden the Bank’s funding base and will be used for expansion of its financing of small and medium-sized businesses and strengthening its position in mortgage origination and consumer lending. As part of the project, IFC may also consider providing up to $2 million GTFP trade guarantee facility. |
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| Project sponsor and major shareholders of project company |
| The project’s sponsor is Inecobank which accounts for 4.5% of assets in the Armenian banking sector. The Bank’s core business areas include retail and SME lending and money transfer services. The shareholder’s structure is as follows: three main individual Armenian businessmen who hold 37.14% for Mr. Baloyan, 33.23% for Mr. Safaryan, and 3.71% for Mr. Grigoryan. International financial institutions including DEG and IFC own 13.50% and 10.00% respectively of the Bank and other individuals own 1.21% each. |
| Total project cost and amount and nature of IFC's investment |
| The proposed IFC investment consists of a senior loan of up to $3 million and a GTFP trade guarantee facility of up to $2 million. |
| Location of project and description of site |
| Inecobank is headquartered in Yerevan, Armenia. The Bank has currently 5 branches and is planning to open additional outlets in Yerevan and the regions. |
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| Anticipated development impact of the project |
The expected development impact of this project is high because it achieves the following objectives in an IDA country:
- enabling the Bank to expand its lending operations and provide commercial financing to businesses in a variety of sectors, therefore fostering economic growth and employment generation;
- helping to develop the residential mortgage standards according to international norms and best practices in Armenia; and
-contributing to building a commercially viable banking system in Armenia. |
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| IFC's expected development contribution |
| IFC’s involvement will improve the Bank’s funding profile and increase the Bank’s visibility with potential investors, thereby enabling it to further develop and expand its loan products, particularly in the areas of SME and mortgage lending. Furthermore, IFC’s involvement will support important corporate initiatives (e.g., in the areas of governance and risk management) which will result in strengthened operational profile. |
| 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.
As an existing IFC client, Inecobank has established a Social & Environmental Management System (SEMS) to screen investments against the IFC FI Exclusion List and applicable Armenian social and environmental laws and appointed an SEMS Officer. These applicable performance requirements will continue to apply.
For this investment the Bank will be required to:
- Upgrade its existing SEMS prior to disbursement to the satisfaction of IFC;
- Continue to ensure that responsible, qualified persons are appointed to manage and implement the SEMS;
- Commit to implement the SEMS to ensure that its investments/activities supported by IFC financing are in compliance with the Applicable Performance Requirements;
- Continue to submit a periodic report to IFC as per a format to be provided by IFC.
The mortgage and consumer finance components will not attract any S&E requirements. |
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| For inquiries about the project, contact: |
Alla Pavlova, Head of Executive Office, Inecobank
e-mail: alla.pavlova@inecobank.am |
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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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