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| URSA Synd. Loan |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment 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. |
| Project number | 26629 |
| Company name | URSA Bank |
| Country |
| Russian Federation |  |
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| Sector | Commercial Banking - General |
| Environmental category | FI |
| Department | Reg Ind, Financial Markets, EMENA |
| Status | Completed |
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| Date SPI disclosed | November 19, 2007 |
| Projected board date | December 19, 2007 |
| Previous Events | Invested: March 10, 2008
Signed: February 21, 2008
Approved: February 6, 2008 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
URSA Bank (URSA Bank or the Bank) was formed in December 2006 as a result of the merger of two regional banks: Sibacadembank, headquartered in Novosibirsk, and Uralvneshtorgbank, headquartered in Yekaterinburg. Now it is one of the largest regional banks in Russia. Its total assets as of June 30, 2007 were $5.5 billion and total equity $1 billion.
The Bank is a universal bank, offering a wide range of services to its retail and corporate clients. Although its original strategy was to focus on SMEs, since 2004 the Bank has actively developed retail lending and more recently it also expanded residential mortgage lending.
The Bank is rated by international rating agencies, with Fitch rating of B (Positive) and Moody’s rating of Baa3 (Stable). Standard & Poor’s put the Bank on the 4th place in its ranking of the most transparent banks in Russia in 2007 (among 30 largest banks included by S&P in its Transparency and Disclosure Survey of Russian Banks 2007). |
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| Project sponsor and major shareholders of project company |
| The Bank is owned by several Russian shareholders led by Mr. Igor Kim, EBRD, DEG, and international portfolio investors. Mr. Kim, the Bank’s major shareholder, together with his close business partners Mr. Bekarev and Mr. Taranov, jointly own 52.1% of the voting shares. EBRD, DEG and Clariden Leu jointly hold over 28% of the voting shares. |
| Total project cost and amount and nature of IFC's investment |
The proposed project is an investment package consisting of an A Loan of up to $50 million and with a tenor of up to 4 years for IFC’s account (A Loan) and a B Loan of up to $100 million and with a tenor of up to 2 years (B Loan). The IFC A Loan will be used:
- for trade finance;
- for project finance, working capital and investment loans to small and medium sized enterprises; and
- to make loans to enterprises to finance investments in goods and services aimed at improving the efficiency of energy use in buildings, industrial processes and other energy end-use applications.
The B Loan will be utilized mostly for shorter-term trade finance loans. |
| Location of project and description of site |
| Headquartered in Novosibirsk, as of November 1, 2007 the Bank has 20 regional branches, 244 outlets, 3 foreign representative offices and 8,940 employees in approximately 120 cities and towns of the Ural and Siberian Federal Districts of Russia. Proceeds from both A and B loans will be on-lent throughout the entire Bank’s branch network. |
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| Anticipated development impact of the project |
The extensive regional branch network, and presence of SME and mortgage finance among the Bank’s priority business lines make the Bank an important strategic partner of IFC. By providing support to URSA Bank, IFC continues supporting its strategic development objectives in Russia – in particular, increasing access to finance for SMEs, and bringing innovative and sustainable banking products and high-quality banking services into the regions of Russia.
The project will help the Bank to introduce new products and services with high development impact such as energy efficiency (EE) finance. The Bank’s extensive branch network in Siberia and the Urals and its SME client base make it a very good candidate for energy efficiency lending. The Financial Markets EE strategy in Central and Eastern Europe includes leveraging IFC’s existing financial institutions client base and integrating EE into SME, housing and consumer finance offerings; developing innovative financial structures and new products; and building a robust advisory services program to support capacity building at client level. By working closely with URSA Bank in this project, IFC would play a critical catalytic role in mobilizing the EE-focused funding for the SME sector in Russian regions via a demonstration effect, which is in line with its Financial Markets and EE strategies. Encouraging URSA Bank to develop EE-focused lending business will therefore further enhance the development impact of the project.
In addition to provision of financing IFC plans, as a related, but separate project, to provide advisory services to URSA Bank and its clients on technical, financial and legal aspects of EE finance, as well as to provide EE-relevant training to URSA Bank’s loan officers, assistance in EE product development, and assistance in EE projects pipeline development.
Support provided to URSA Bank, the largest regional Russian bank operating in the Urals, Siberia and the Russian Far Eas, will have a significant positive impact on the Russian regional banking system in general. |
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| IFC's expected development contribution |
IFC plays multiple roles in this project:
- it will provide the much-needed funding to the Bank at the time when the funds are scarce on the market due to current liquidity constraints; and
- it will contribute to the competitiveness of Russian SMEs through the EE component of the project, thereby enabling the SME sector, and specifically the regional SME sector, to become a more meaningful driver of Russia’s GDP growth, while lowering energy consumption and related CO2 emissions. |
| Environmental and social issues - Category FI |
This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.
During appraisal, IFC will analyze the FI portfolio, for types of transactions, size, tenor and industry sectors and determine the Applicable Performance Requirements, if any, that would include a combination of:
- The IFC FI Exclusion List and/or
- The applicable National Social and Environmental Laws and regulations and/or
- The IFC Performance Standards.
IFC will also review, if required, the capacity of the FI to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in the SEMS.
Based on the review, the project will be required to:
- Develop an, or upgrade, if necessary, any existing Social & Environmental Management System (SEMS), prior to disbursement to the satisfaction of IFC;
- Identify responsible, qualified persons to manage and implement the SEMS;
- Commit to implement the SEMS, to ensure that its investments/activities are in compliance with the Applicable Performance Requirements;
- Submit a periodic report to IFC as per a format to be provided by IFC. |
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| For inquiries about the project, contact: |
John McNaughton, Managing Director
URSA Bank
Moscow, Bryanskaya Street, 5
Russian Federation
Telephone: +7-495-935-7264
Fax: +7-495-935-7261 |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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