ProCredit Serbia - Energy Efficiency

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	25063
Company name	ProCredit Bank Serbia
Country	Serbia and Montenegro
Sector	Finance & Insurance
Environmental category	FI
Department	Global Financial Markets Group
Status	Active

Date SPI disclosed	August 23, 2006
Projected board date	September 22, 2006
Previous Events	Invested: February 28, 2007 Signed: November 22, 2006 Approved: November 20, 2006

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

ProCredit Bank Serbia (the Bank or PCB) was the first foreign bank to enter the Serbian market after the fall of the Milosevic regime. It focuses on lending to micro- and small-enterprises.

The project consists of a EUR10 million energy efficiency senior term loan to the Bank. The facility would be dedicated to financing Energy Efficiency (EE) improvements.

Anticipated development impact of the project

The development impact for this project is high. It fosters:

- Energy Efficiency Improvement:

The project would support the launching of a new Energy Efficiency program with a commercial bank as an intermediary. The EE program would focus on:

- EE improvements in MSEs; and
- the use of cleaner and renewable sources of energy (such as natural gas, solar energy) by MSEs.

- Improved Competitiveness:

Due to reduced energy costs as well as quality improvements as a result of technology and process upgrades, the project would contribute to improving the competitiveness of MSEs supported.

- MSE Lending:

It would provide long term funding to Serbian MSEs that constitute a significant engine of economic growth, while remaining underserved by the financial sector.

- Capacity Building:

It would strengthen the Bank’s balance sheet, improve its asset liability management and enable the Bank to expand its financial intermediation capacity.

Overall, the IFC/ProCredit EE program would result in conservation of energy and lower CO2 emissions, and have important social and economic implications by lowering monthly energy bills for MSEs. Through the project, IFC would introduce a new highly developmental energy efficiency MSE product to the Serbian market. This would be the first product of this type offered by a bank in Serbia, and it would have strong replication potential.

IFC's expected development contribution

By providing the loan, IFC would play an active role in helping to:

- build and strengthen the delivery capacity of term financing to MSEs;
- promote the development of specialized and innovative Energy Efficiency (EE) products; and
- encourage lending to the underserved MSE segment in the local market, specifically in the EE sector.

Environmental and social issues - Category FI

This is a category FI project as per IFC’s Environmental and Social Review procedure. As part of an existing transaction, the bank uses the template environmental management system (EMS) common to all ProCredit banks. For this investment, IFC will review the existing EMS for consistency with IFC’s new Sustainability Policy, and suggest changes to address gaps, if any. ProCredit Serbia will need to provide an update on the EMS incorporating the suggested changes prior to disbursement and commit to implementing the same.

IFC PROJECTS