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| 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. |
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| Project number | 22801 |
| Project name | Victoriabank II |
| Country | Moldova |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | Victoriabank |
| Environmental category | FI-2 |
| Date SPI disclosed | April 30, 2004 |
| Projected board date | June 1, 2004 |
| Status | Active |
| Previous Events | Invested: August 12, 2004
Signed: June 29, 2004
Approved: June 29, 2004 |
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| Description of company and purpose of project |
The project is to provide Victoriabank (VB or the bank), Moldova’s 3rd largest commercial bank, with a $5 million loan for IFC’s own account. The loan would have a final maturity of seven years and will be used by the bank for on lending to private Moldovan enterprises, including those operating in the housing sector.
Over the last couple of years the recovery of Moldovan economy has led to the rising demand for housing. Generally the country is faced with the low quality of the existing housing stock, increased housing deficit, and a low housing affordability. Recently this situation translated into a lot of construction starts and rising real estate prices due to the increased purchasing power of the population and unmet demand for quality dwelling. Concurrently, Victoriabank began lending to real estate developers and extending housing loans to individuals. The bank is planning to continue developing this business line. However, the local banking sector is still facing difficulties in accessing long term funding. By extending a seven-year loan to VB, IFC could provide Moldovan companies and individuals with much needed financing of longer tenor. The proposed project would complement IFC’s support to Moldovan SMEs channeled through projects with Moldinconbank, Fincombank and Victoriabank. |
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| Project sponsor and major shareholders of project company |
Victoriabank was established in 1989 as one of the first private commercial banks in the former Soviet Union. VB offers traditional commercial banking activities to private companies and retail customers. The bank was reorganized in 1995, at which time 58,75% of the shareholding was bought by foreign investors. The current shareholding structure is as follows:
Danube Fund, 23.03%
EBRD, 15.06%
Alpha Bank Romania, 12.50%
LR-Uniune SRL, 9.81%
Intrade Management, 5.61%
Victor Turcanu, 10.45%
Other, mostly Moldovan entities, 23.54%
The largest shareholder, the Danube Fund, is an off shore limited liability fund based in Cyprus. It is sponsored by Alpha Credit Bank of Greece (21%), EBRD (20%), IFC (11%) and others. Mr. Turcanu, the bank’s president, owns 10.45% of Victoriabank’s shares. Most of VB's top management has been with the Bank since its establishment. |
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| Total project cost and proposed IFC investment |
| The total project cost is estimated at $5 million and consists of an A Loan for IFC’s own account. |
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| Location of project and description of site |
| Victoriabank is headquartered in Chisinau, the capital of Moldova and has 11 branches (including 3 in Chisinau) throughout the entire country and 6 agencies. Its traditional area of geographic focus is Chisinau, the main economic center of Moldova containing about a quarter of the country’s population. |
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| Project Development Impact and IFC's Role |
The project is expected to have a strong developmental impact by significantly contributing to poverty reduction in Moldova. The proposed loan for VB will provide long-term financial resources to a large number of local companies and individuals, thus stimulating fixed asset investments, business growth and job creation, that will in turn help reduce poverty.
The project is also expected to have a significant contribution to economic development by allowing a greater degree of private sector participation by Victoriabank in the Moldovan banking system. Moreover, an IFC loan with a seven-year maturity will provide VB with a more stable and diversified funding base. |
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| Environmental and social issues - Category FI-2 |
This is an FI type 2 project. Victoriabank will need to demonstrate that its existing EMS can address the environmental and social issues that may arise from providing loans to housing developers under this line.
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| To contact the project company, please write to: |
Galina Proidisvet, Prim Vice-President
Str 31 August 1989, 141
Chisinau, Republica Moldova
Phone: 373 22 576 100
Fax: 373 22 233 561 |
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