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| Description of company and purpose of project |
The proposed project is a jeopardy case and involves the recovery of IFC’s arrears in Montenegro, the Republic of Serbia and Montenegro. These loans were made by IFC to enterprises and a bank in Montenegro during the 1980’s. The loans stopped being serviced after the break-up of Yugoslavia in the early 1990’s. As part of a settlement of these arrears, IFC would subject to satisfactory due diligence:
- acquire a stake of at least 10% in Podgoricka Banka a.d., Podgorica (PB or the bank); and
- extend a loan of up to EUR 5 million to PB. |
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| Project sponsor and major shareholders of project company |
| As of December 31, 2003, PB had total assets of EUR 53 million. The bank's equity was EUR 15 million and it is well capitalized. As interest margins in Montenegro are still very high, PB was, in spite of its small size, very profitable and showed an after tax profit of EUR 1.1 million at the end of 2003. PB is majority owned by the Republic of Montenegro, directly (55.43%) and indirectly through state owned companies (26.89%). Private shareholders hold the remaining shares in the bank. PB is slated for privatization and a privatization tender will be announced as soon as feasible, potentially already in the second half of 2004. |
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| Total project cost and proposed IFC investment |
| The project will involve an IFC equity investment of EUR 1.5 to 3 million and an A-loan for IFC’s account of up to EUR 5 million. |
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| Location of project and description of site |
| PB is headquartered in Podgorica and has branches all over Montenegro. The bank has 237 employees, three branch offices, in Podgorica, Bar and Niksic, and another ten outlets in different cities in Montenegro. |
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| Project Development Impact and IFC's Role |
IFC’s equity investment in PB will help to strengthen the corporate governance in the bank. This will make it easier for the bank to attract strategic investors during its forthcoming privatization process.
Currently banks in Montenegro basically have no access to long-term funding. IFC’s loan to PB will allow the bank to support investment projects in Montenegro with long-term loans. |
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| Environmental and social issues - Category FI-2 |
This is a category FI Type 2 project according to IFC's environmental review procedure. The fund has committed to establishing an environmental management system that will ensure that investments are consistent with applicable host country environmental laws and regulations as well as applicable World Bank Group environmental, health and safety guidelines and policies; designating appropriate individuals who will have responsibility for the environment and who will attend IFC's environmental management workshops; submitting to IFC an environmental management plan; obtaining clearance by IFC for any category A or infrastructure investment by the fund; and submitting to IFC an annual environmental performance report.
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| To contact the project company, please write to: |
Podgoricka Banka a.d., Podgorica
Novaka Miloseva 8a
81000 Podgorica
ljdragicevic@pgbanka.com |
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