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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 | 11427 |
| Project name | Bulgarian American Credit Bank II |
| Country | Bulgaria |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | Bulgarian-American Credit Bank A.D. |
| Environmental category | C |
| Date SPI disclosed | February 27, 2002 |
| Projected board date | April 30, 2002 |
| Status | Completed |
| Previous Events | Invested: September 18, 2002
Signed: July 13, 2002
Approved: May 16, 2002 |
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| Project sponsor and major shareholders of project company |
| The Bulgarian American Credit Bank (BACB or the bank) is owned 99.99% by Bulgarian-American Enterprise Fund (BAEF), and 0.01% by Bulgarian-American Property Management, a Bulgarian limited liability company wholly owned by BAEF. BAEF is a not-for-profit U.S. corporation established pursuant to the U.S. Support for Eastern European Democracy Act of 1989 and engaged primarily in private sector equity investment. |
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| Total project cost and proposed IFC investment |
| The proposed IFC investment is a USD10 million equivalent facility (the facility) to support BACB's mortgage finance business. The facility would be comprised of two USD5 million equivalent parts. |
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| Location of project and description of site |
| BACB's headquarters are located in Sofia, the capital city of Bulgaria. The bank also has branches in three other major Bulgarian cities. Investments can be made throughout the country. |
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| Description of company and purpose of project |
With assets and capital of about USD56 million equivalent and USD20 million equivalent respectively, BACB focuses on small and medium enterprises (SME) and mortgage lending. The bank's loan portfolio of about USD52 million equivalent consists of 75% SME loans and 25% mortgage loans. BACB has been a leader in mortgage finance in Bulgaria. The bank successfully spearheaded the effort to draft and enact the Mortgage Bond Law, and, in July, 2001, was the first bank to issue a mortgage bond, which has since been listed locally. BACB has now asked for IFC's financing for the proposed facility so as to support the growth of its mortgage finance business. The first part of the facility (Part A) would be a revolving line of credit to fund BACB’s portfolio of mortgage loans until they are refinanced through the issuances of mortgage bonds. The second part (Part B) would be for IFC’s participation in the bank’s mortgage bond issuances, in the form of either a subscription in or credit enhancement of a BACB mortgage bond.
The facility should enable BACB to expand the reach of its mortgage origination. It is also envisioned that IFC participation in future BACB mortgage bonds would enable the bank to catalyze increased investor interest. The venture should also enhance the availability and affordability of residential mortgages in Bulgaria, and have a positive financial markets impact, as the volume of mortgage bonds and OTC market trading grows. Further, it would enable small entrepreneurs to use their home equity to secure small business (microfinance) loans, which are otherwise difficult to obtain. |
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| Environmental and social issues - Category C |
This is a Category C project, according to IFC’s Procedure for Environmental and Social Review of Projects.
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| To contact the project company, please write to: |
Dennis E. Fiehler, Chief Financial Officer
16 Krakra Street, 1504 Sofia Bulgaria
Phone: 359-2-946-0119 |
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