31830 - Sberbank KZ

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Summary of Investment Information

Project Number

31830

Company Name

SB Sberbank JSC

Date SPI Disclosed

Apr 16, 2013

Country

Kazakhstan

Region

Central Asia and Turkiye

Projected Board Date

May 16, 2013

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : May 16, 2013
Signed : May 22, 2013
Invested : Sep 18, 2013

Sector

Commercial Banking - SME Finance

Project Description

The project involves a potential senior loan of up to US$70 million equivalent in Kazakh Tenge to Subsidiary Bank Sberbank of Russia JSC, a commercial bank operating in Kazakhstan (“SBK” or “the Bank”).

SBK’s core activity is to serve the private sector clients in Kazakhstan and is aligned with IFC’s development strategy. The Bank has identified lending to small and medium sized enterprises (“SMEs”) as one of its top priority lines of business.

IFC’s loan would be used by the Bank for on-lending to private SMEs, particularly those operating in the agriculture sector.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	70.0
Equity

Development Impact

The project''s development impact includes:

(i) increasing access to finance for underserved SMEs in Kazakhstan, including those in the agribusiness, which have suffered from restricted access to finance as a result of the financial crisis, and

(ii) diversification of the Kazakh economy away from dependence on the oil sector through a wider support to the private sector development which is to result in more job creation and life improvement.

IFC''s additionality can be summarized as follows:

(i) deepen the private sector lending capacity of SBK through increasing access to long-term finance, including in local currency,

(ii) support the Bank in promoting its modern technologies and expertise in the Kazakh banking sector as part of the Sberbank Group''s south-south regional expansion, and

(iii) strengthen SBK''s capacity in social and environmental management.

E&S Category Rationale / Risks and Mitigation

The proposed project is with the existing IFC client (GTFP facility) and has been categorized as category FI-2 according to the IFC Environmental and Social Review Procedure. The rational for categorization is based on the assessment of the current SBK portfolio and the portfolio of the Bank’s Small Business Department, in particular, since this IFC loan is targeted to on-lending to small business.

The Bank’s small business portfolio is invested in sectors of consumer goods, construction, transport services, food and beverage, agriculture, utilities and a number of others, which individually do not represent significant share (less than 1%) of the bank’s portfolio. Among them are the following E&S potentially risky sectors: chemicals, non-ore minerals production, and extraction, oil and gas.

Thus, the business activities financed from the small business portfolio have potential limited adverse environmental or social risks or impacts that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures.

According to the nature of the activities financed, the client will be required to demonstrate compliance of its investment with the IFC Exclusion List, national E&S laws, the IFC Performance Standards (for small business loans in high risk sectors and above US$ 1,000,000); demonstrate compliance with the IFC Performance Standard 2: Labor and Working Conditions in its employment practices; and regularly report its E&S performance in accordance with the format to be provided by IFC.

The key risks and impacts of the project are associated with the Bank’s agenda to grow its small business portfolio, particularly in case of lending to potentially riskier sectors and larger amounts, and expand its portfolio in agriculture. The risks are potentially not high and manageable. The E&S appraisal carried out by IFC indicates that SBK does not apply all items, which are on the IFC Exclusion List, in screening its loans, and does not have a formalized Environmental and Social Management System (ESMS). The current E&S practices include checking borrowers’ compliance against some of Exclusion List items and with E&S laws only as part of general loan due diligence. Growing its operations in small business sector, it will be crucial for the Bank to thoroughly apply the IFC Exclusion List and set up formal and recorded ESMS procedures to evaluate and manage the E&S risks associated with its investment, particularly those in the riskier sectors, as well as to make sure that all personnel involved in small business lending receives an appropriate training. The close monitoring of these processes by the Bank’s management will be crucial. The Bank was found to be in compliance with PS2 on labor and working conditions.

Task Description	Anticipated Completion Date
Appoint two ESMS officers	Condition of Commitment
Adopt IFC Exclusion List	Condition of Commitment
Develop ESMS	Condition of Disbursement
Train loan officers of small business department	Condition of Disbursement
Develop sector guidelines for large loans in potentially high risk sectors, which require PS compliance check	Within 3 month of Disbursement

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Local Access of Project Documentation

Mr. Shukhrat Sadyrov
Deputy Chairman of the Management Board

Subsidiary Bank Sberbank of Russia JSC
30/26, Gogol/Kaldayakov Str.
Almaty, Republic of Kazakhstan

Phone: +7 727 2500090
Fax: +7 727 2500063
E-mail: mailto:shukhrat.sadyrov@sberbank.kz

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
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CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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