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| Eskhata Bank SL |
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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 | 28227 |
| Company name | Open Joint Stock Company, Bank Eskhata |
| Country | Tajikistan |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Pending Disbursement |
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| Date SPI disclosed | May 18, 2009 |
| Projected board date | June 18, 2009 |
| Previous Events | Signed: June 30, 2009
Approved: June 25, 2009 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
The proposed project is to provide a senior loan of up to $5.0 million and additional GTFP Guarantee Facility for up to $2.0 million to the Open Joint Stock Company Bank Eskhata (the “Bank” or “EB”) to support the Bank’s MSME lending operations throughout Tajikistan. EB is an existing IFC client that has been providing credit and other financial services in Tajikistan with focus in the northern part of the country.
IFC would play an important developmental role by providing EB with additional longer term resources for on-lending to MSMEs, which have difficult access to funding.
Established in 1993, Eskhata Bank is one of the better managed medium banks in Tajikistan with enhanced presence in the northern part of Tajikistan. EB is a transparent financial institution, having demonstrated its full commitment to developing and adhering to best practice corporate governance standards and active development of MSME lending.
EB is currently the fifth-largest bank in Tajikistan ranked by total assets, with approximately 6.7% market share of total banking system. Eskhata is headquartered in Khujand city, the Sughd region in the northern part of Tajikistan, and has a network of nine branches located in Khujand, the other major centers of the Sugd Region, and the capital city Dushanbe.
The Bank offers traditional range of banking services with greater focus on development of its lending to MSMEs that play an important role in the economy of Tajikistan. As of December 31, 2008, EB MSME loans represented over 70% out its total loan portfolio. |
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| Project sponsor and major shareholders of project company |
Two largest EB shareholders are EBRD and Shore Capital International Ltd. owning 21% of the Bank shares each. Nasirov’s family, the historical owners of the Bank, jointly holds about 37% of the Bank’s shares. The remaining balance of EB’s share capital is owned by seven legal entities and more than 60 individuals.
The Nasirov’s family is well-respected and regarded as well qualified and enjoys good reputation, having developed EB into a financial institution with a strong brand name, especially in northern part of Tajikistan, and a solid client base from among the local industries. |
| Total project cost and amount and nature of IFC's investment |
| The project consists of IFC’s senior loan of up to $5.0 million and additional GTFP Guarantee Facility for up to $2.0 million for the benefit of the Eskhata Bank to support the Bank’s MSME lending operations. |
| Location of project and description of site |
| Eskhata is headquartered in Khujand city, the Sughd region in the northern part of Tajikistan, and has a network of nine branches located in Khujand, the capital city Dushanbe, and the other major centers of the Sugd Region. |
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| Anticipated development impact of the project |
The project is expected to have a significant development impact as it would enhance the Bank’s ability to lend to MSMEs and would enable the Bank to offer wider financing options to Tajik MSMEs that is crucial for the sustainable development of the private sector across the country that would result in improved economic development and poverty reduction.
The project is also expected to contribute to the increased competition in the financial sector and create a demonstration effect for other investors to invest into the MSME segment. |
| IFC's expected development contribution |
- Longer Term Funding: Through this project, IFC would play an important developmental role by providing EB with additional longer term resources for on-lending to MSMEs, thereby ensuring the Bank’s sustainability and loan portfolio diversification while supporting the Tajik MSME sector. Without the proposed funding EB would not likely be able to get long term funding from other commercial or international financial institutions.
- Catalyzing Growth of MSME Finance: By providing term funding to enable EB to sustain its MSME lending IFC would support the MSME sector in Tajikistan which is a key to alleviating poverty in the country as well as employment generation.
- Promotion of Environmental and Social Standards of Excellence: IFC, being global leader for sustainable environmental and social banking practices, continues to be positioned well to help EB develop further in this regard as part of the loan approval and supervision process, thereby catalyzing industry improvements in Tajikistan. It is unlikely that other market players would be able to provide EB with such an important value added expertise. |
| Environmental and social issues - Category FI |
| For this Category FI project, IFC reviewed Eskhata Bank's risk management systems and capacity in terms of performing the necessary social & environmental due diligence against the applicable performance requirements and the Bank's labor practices against IFC's Performance Standard 2: Labor and Working Conditions. Eskhata Bank is an existing IFC client with requirements to follow the environmental requirements of the EBRD, including screening investments against EBRD's and IFC’s Exclusion list and ensuring that all sub-projects comply with the applicable national health, safety, and environmental regulations as well as providing an annual report. As a condition of disbursement and to the satisfaction of IFC, the client will be required to develop and commit to implementing a Social & Environmental Management System (SEMS) to ensure compliance with the applicable performance requirements, which include the applicable national social and environmental laws and regulations, and the IFC FI Exclusion List. |
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| For inquiries about the project, contact: |
Mr. Khurshed Nasirov
Chairman of the Management Board
Open Joint Stock Company Bank Eskhata
135, Gagarin Street, Khujand City, Republic of Tajikistan, 735700
Phone: + 992-34 22 6 69 99
Fax: + 992-34 22 6 69 99 |
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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 |
| Local access of project documentation |
Open Joint Stock Company Bank Eskhata
135, Gagarin Street, Khujand City, Republic of Tajikistan
Phone: + 992-34 22 6 69 99
Fax: + 992-34 22 6 69 99 |
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