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Summary of Project Information (SPI) |
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| Project number | 10033 |
| Project name | American Bank of Albania |
| Country | Albania |
| Sector | Commercial Banking - General |
| Department | Reg Ind, Financial Markets, EMENA |
| Company name | American Bank of Albania |
| Environmental category | B |
| Date disclosed | April 24, 2000 |
| Status | Completed |
| Previous Events | Signed: May 31, 2001
Approved: August 10, 2000 |
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Summary Of Project Information (SPI) Project NameAlbania - IFC Guarantee Facility to the American Bank of ALbania
RegionEurope
Sector
Project No10033
Projected Board DateMay 24, 2000
Company NameThe American Bank of Albania
Technical Partner and/or Major Shareholders
The American Bank of Albania (ABA) is 100%-owned by the Albanian-American Enterprise Fund (AAEF), a non-political, US corporation established by USAID to promote private sector development in Albania. The paid-in capital was increased from US$3 million to US$4.7 million in 1999. During its first full year of operations in 1999, ABA's balance sheet grew from US$7.4 million to US$46.4 million, a growth attributable to a sharp increase in deposits (from US$4 million to US$41 million) initially fueled by foreign NGO and supranational deposits during the Kosovo crisis but since maintained by the Bank’s marketing and good reputation, with a steady increase of savings deposits from local customers. However, given the high overhead costs associated with the establishment of a new bank and especially with the heavy investments in a technologically advanced banking programs in Information Technology and communication, ABA reported a loss of (US$440,000) for its first three months of operation in 1998 and a small profit of US$82,000 in 1999.
Project Cost Including proposed IFC investment
The size of the SME loan portfolio of the American Bank of Albania under the Facility can be as small as US$5 million (for all 50% guarantee) or as large as US$25 million (for all 10% guarantee). IFC's maximum exposure will be US$2.5 million.
Location of project and Description of site
The loans extended by the American Bank of Albania under the facility will be for small and medium private enterprises located in Albania.
Description of Company and Purpose of Project
The project consists of a partial, parity loss to be provided to the American Bank of Albania in order to encourage its lending to SMEs. IFC would guarantee a new portfolio of the Bank's SME loans. IFC's maximum exposure under the facility would be US$2.5 million. The facility would cover up to 50% of losses on each loan's principal on a parity loss basis with ABA.
The American Bank of Albania was established primarily to provide commercial banking services to retail and institutional markets in Albania but since 1999 has been slowly tapping the SME sector. Today (as of March 2000), with a SME loan portfolio of about US$4.4 million, ABA is looking into increasing this activity in a prudent manner with IFC's partnership via the proposed guarantee facility. The projects to be presented under this facility are currently being identified by ABA in close collaboration with the Balkans Enterprise Facility.
The project will have a very strong development impact. Through this project, ABA will be able to grow its existing small loan portfolio to SMEs. The creation of viable commercial ventures among SMEs and new employment opportunities are vital in Albania.
This project paves the way for other new and innovative financial interventions to support the SME sector. While there is strong multilateral support for substantive SME initiatives, local banks are looking to IFC's leadership and experience in designing and structuring commercially focused interventions and evaluating alternative approaches and providing some level of on-going oversight and control.
Environmental Category and Issues
This is a Financial Intermediary (FI) Type 2 project according to IFC's environmental review procedure. ABA will be required to undertake an environmental review of each subproject to ensure compliance with Albanian environmental, health and safety requirements and with IFC's Microfinance Exclusion List. Category A projects will be ineligible for financing under the credit line. ABA will be required to put in place an environmental management system for this purpose, including designation of environmental officers and implementation of environmental review procedures.
Date SPI sent to InfoShop April 24, 2000
“This Summary of Project Information is prepared and distributed to the public in advance of consideration of the proposed transaction by the Corporation’s Board of Directors. It is provided for the purpose of enhancing the transparency of IFC’s activities and should not be construed as presuming the outcome of IFC Board consideration.”
For Additional Information contact: Corporate Relations Unit -
telephone: (202) 473-7711
facsimile: (202) 974-4384 |
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| Environmental documents for this project are available at http://www.ifc.org/projects and from the World Bank InfoShop (http://www.worldbank.org/html/pic/aboutinfo.html). |
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