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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 | 10786 |
| Project name | PBS Group Pre-Privatization |
| Country | Bosnia and Herzegovina |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | Sarajevo Privatization Venture Ltd. |
| Environmental category | FI |
| Date SPI disclosed | May 9, 2001 |
| Projected board date | June 10, 2001 |
| Status | Active |
| Previous Events | Invested: December 17, 2001
Signed: December 14, 2001
Approved: June 14, 2001 |
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| Project sponsor and major shareholders of project company |
The Privredna Banka Sarajevo ("PBS") group consists of seven banks in Bosnia, which are all spin-offs of PBS, which dominated Bosnian banking in Yugoslav times. These banks have a joint and several liability for all guarantees extended by PBS before they were spun off. The project would focus on up to three banks (PBS, Central Profit Banka, Travnicka Banka), which have not yet been privatised.
Before the war in Bosnia, PBS extended several guarantees to various foreign entities on which it defaulted and for which all PBS group banks are now jointly and severally liable. In spite of some previous debt restructurings, these old guarantees could still wipe out all the PBS group banks.
A special purpose vehicle owned by IFC, the creditors of PBS and the Bosnian government would become majority owner of up to three currently state owned PBS banks and would then restructure PBS' pre war debt. As a part of this restructuring, IFC would extend a loan to the special purpose vehicle to pay off the creditors at a substantial discount. As soons as practical, the special purpose vehicle would then sell off these banks to strategic investors. IFC's A-loan would be repaid from proceeds, which the special purpose vehicle receives by selling off these banks. |
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| Total project cost and proposed IFC investment |
| The proposed IFC A-loan will be up to DEM 20 million. In addition, IFC may extend C-loans of in total up to DEM 10 million to individual PBS Group banks. |
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| Location of project and description of site |
| PBS and Central Profit Banka are headquartered in Sarajevo and have branches across the Bosnian Federation. Travnicka Banka is a regional bank and has branches in the Travnik region. |
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| Description of company and purpose of project |
| The proposed Project will help the Bosnian government privatise its share in three still majority state owned banks (PBS, Central Profit Banka, Travnicka Banka) group by June 30, 2001, the deadline agreed with IMF and the World Bank. The Project will also help to restructure guarantees issued by PBS and this will release all PBS group banks from their joint and several liability, which currently threatens the very existence of all PBS spin offs. |
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| Environmental and social issues - Category FI |
The project has been classified as Category FI Type 1 according to IFC's environmental review procedure. Each PBS bank owned by the special purpose vehicle will be required and assisted to begin developing appropriate environmental programs ahead of their eventual sale to strategic investors. Such programs will focus on the appraisal of corporate borrowers' environmental performance, including compliance with Bosnian environmental and health & safety standards.
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| Not applicable. |
| To contact the project company, please write to: |
| RReichel@ifc.org |
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