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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 | 21640 |
| Project name | Opportunity Bank |
| Country | Serbia and Montenegro |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | Opportunity International (Opportunity) |
| Environmental category | FI-1 |
| Date SPI disclosed | February 4, 2004 |
| Projected board date | April 28, 2004 |
| Status | Completed |
| Previous Events | Invested: May 31, 2005
Signed: February 1, 2005
Approved: August 11, 2004 |
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| Description of company and purpose of project |
The project consists of an IFC senior loan of up to Euro 4 million to Opportunity Bank Montenegro (OBM, bank, or the company) for the purpose of financing an expanding loan portfolio. Loans will be made to micro and small business clients in line with OBM’s strategy to finance the growth of micro and small businesses. OBM’s management expects to fund the growth of the loan portfolio partly from externally borrowed funds and partly by mobilizing savings.
Opportunity Bank Montenegro (OBM) was founded in April 2002 to finance the growth of micro and small enterprises in Montenegro and to offer safe savings services to the Montenegrin public. OBM is a licensed and regulated full service bank that provides loans to both existing businesses and start-ups. Loan sizes range from EUR 500 to EUR 10,000 for micro-entrepreneurs and generally up to EUR 100,000 (with a present average loan size of EUR 30,000) for small enterprises.
Opportunity Bank Montenegro is the successor to Microcredit Montenegro (MCM), which was founded in 1999 as a non-government, non-profit organization offering loans to small-business entrepreneurs in Montenegro. MCM's primary target clients were entrepreneurs and farmers who lacked the financial means necessary to develop their business. MCM has made a total of more than 10,000 loans to trade, service, manufacturing, and agricultural clients. The existing clients of MCM have mostly become clients of OBM, and MCM has ceased to grant new loans. |
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| Project sponsor and major shareholders of project company |
The project sponsor and main shareholder (88%) is Opportunity International USA, a non-profit organization with the aim to fight against poverty. OI is a pioneer in microfinance development and cooperates with 42 implementing partners that deliver Opportunity’s loan program in 24 countries. In Eastern Europe, OI has implementing partners in Russia, Croatia, Macedonia, Bulgaria, Romania, Poland, Albania, Serbia and Montenegro.
Other Shareholders: The rest of the shares (12%) are distributed among 11 other shareholders. |
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| Total project cost and proposed IFC investment |
| OBM’s portfolio expansion program is expected to require about $20 million in funding from various sources over the next three years. IFC’s senior loan of Euro 4 million (approximately $5.0 million equivalent) will be in two tranches. Total disbursed loan amount cannot at any time exceed 60% of the Bank’s net worth. Tranche 1 would be for Euro 3 million ($3.8 million equivalent), with tranche 2 becoming effective if and when the bank’s net worth can support the extra debt. |
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| Location of project and description of site |
| The bank’s headquarters are in Podgorice, the capital of the Republic of Montenegro. In addition, the bank has branches in the towns of Bar (coastal region), Niksic (central region) and Berane (northern region). |
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| Project Development Impact and IFC's Role |
| Very high development impact. The developmental impact of commercially-run microcredit programs on post-conflict transition economy populations with little or no access to formal credit institutions has been well demonstrated by IFC's microcredit investments in several countries including Serbia, Kosovo, Bosnia-Herzegovina and Albania. IFC's developmental strategy in the field is to attract serious private sector investment in microfinance by demonstrating that microfinance can be a viable commercial proposition. The WBG strategy for Serbia and Montenegro is to support structural and social reform by the government in order to achieve a lasting economic recovery and to play a lead role in coordinating the rebuilding of the economy. A key element of the WBG strategy is the rebuilding of the financial sector. This project complements the work of the WBG, which has focused on the restructuring and regulation of the larger banks and of the overall banking system. |
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| Environmental and social issues - Category FI-1 |
OBM is a category FI type 1 project as classified by IFC’s environmental and social review procedures.
Opportunity Bank will be required to implement an environmental managements system to ensure that its lending activities are in compliance with host country environmental and social requirements and with IFC's Microfinance Exclusion List.
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| To contact the project company, please write to: |
Mr. Keith Flintham
CEO, Opportunity Bank Montenegro
kflintham@opportunitybank.cg.yu
Opportunity Bank Montenegro, Head Office, Podgorica, Republic of Montenegro |
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