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| Absolut Tier 2 |
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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 | 25119 |
| Company name | Absolut Bank |
| Country | Russian Federation |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Active |
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| Date SPI disclosed | January 18, 2007 |
| Projected board date | February 20, 2007 |
| Previous Events | Invested: December 24, 2007
Signed: December 14, 2007
Approved: March 13, 2007 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
The project company is Absolut Bank (Absolut or the Bank), a medium-sized Russian commercial bank, operating primarily in Moscow, the Moscow region, and St.Petersburg, currently expanding into selected Russian regions. It is a well-managed and profitable institution experiencing strong asset growth, with good market position and high efficiency of operations. The Bank’s core business is lending to corporates (including small and medium-sized enterprises), housing finance and trade finance.
The project consists of a seven-year unsecured subordinated loan to enable the Bank to strengthen its capital base and expand its operations. |
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| Project sponsor and major shareholders of project company |
| The major shareholders of the Bank are three Moscow entrepreneurs, Messrs. Svetakov, Galin, and Truskov, who collectively and severally hold 78% of the Bank’s shares. They are also shareholders of a holding company of the same name, which is active in import of consumer electronics, production of consumer goods, real estate development and other sectors. The remaining 22% of the shares are held by Mr. Kosolapov (Executive Director of Absolut Group), IFC, and Mr. Serdtsev (the First Deputy Chairman of the Management Board). |
| Total project cost and amount and nature of IFC's investment |
| IFC will provide a seven-year unsecured subordinated loan of up to $30 million. |
| Location of project and description of site |
| Absolut Bank is headquartered in Moscow and has a network of 38 branches and outlets in Russian regions. The Bank plans to open new branches to be strategically present in 20 key Russian regions by 2008. |
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| Anticipated development impact of the project |
The project is expected to have a significant development impact:
- SME and retail clients will have increased access to finance as a result of the Bank’s growing portfolio in these areas.
- Individuals will have increased access to housing finance as a result of the Bank’s growing mortgage portfolio.
- Retail customers in the regions will have greater access to finance, as the Bank builds its regional branch network. |
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| IFC's expected development contribution |
IFC’s unique role in the proposed project will be:
- provision of long term funding, which is still a scarce resource in the market;
- provision of housing finance technical assistance, and
- provision of corporate governance advice.
Moreover, the proposed subordinated loan is expected to be catalytic for further fund raising by the Bank. IFC shareholding position together with the proposed subordinated loan will enable the Bank to:
- increase mobilization of private deposits via its growing branch network;
- tap local and international debt markets for funding; and
- mobilize syndicated loans. |
| 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.
Based on Absolut Bank’s portfolio, the Applicable Requirements include the IFC FI Exclusion List and the applicable National Social and Environmental Laws and regulations.
As an existing IFC client, Absolut Bank has implemented an SEMS and provided regular annual environmental performance reports. As the proposed project will apply IFC’s revised social and environmental requirements, IFC will review the existing SEMS and suggest Supplemental Actions, if required, to address any gaps.
Based on the review, the project will be required to:
- Upgrade, if necessary, its existing SEMS, prior to disbursement to the satisfaction of IFC.
- Commit to implement the SEMS, to ensure that its investments/activities are in compliance with the Applicable Requirements.
- Commit to take action to remedy any gaps in SEMS implementation on an ongoing basis.
- Continue to submit periodic reports to IFC as per a format to be provided by IFC. |
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| For inquiries about the project, contact: |
Svetlana Rumyantseva, Associate Investment Officer
Financial Markets, Portfolio Management Department
International Finance Corporation
E-mail: SRumyantseva@ifc.org
Anatoly Maksakov, Head of International Business department
Absolut Bank
Central Office
127051, Moscow, Tsvetnoy Boulevard, 18
Telephone:+7 (495) 777 71 71
Fax: +7 (495) 995 10 22
Website: http://www.absolutbank.com/
E-mail: address info@absolutbank.ru |
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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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