32741 - KICB MSME2

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Summary of Investment Information

Project Number

32741

Company Name

Kyrgyz Investment and Credit Bank CJSC

Date SPI Disclosed

Sep 27, 2013

Country

Kyrgyz Republic

Region

Central Asia and Turkiye

Projected Board Date

Oct 28, 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 : Oct 29, 2013
Signed : Nov 22, 2013
Invested : Dec 27, 2013

Sector

Commercial Banking - SME Finance

Project Description

Kyrgyz Investment and Credit Bank (“KICB” or the “Bank”) is a closed joint-stock company, which was incorporated in the Kyrgyz Republic in 2001. Since the Bank was established, the Bank has gradually developed as one of the leading providers of financial services to private sector in the country. KICB is currently the second largest bank in terms of total assets and loan portfolio and the first largest bank in terms of total capital in the country. KICB runs its operations through 10 branches and 19 sub-branches, mainly located in the regions, and the Head Office located in Bishkek.

The project involves a potential senior loan of up to US$10 million and a trade finance guarantee facility of US$2 million to Kyrgyz Investment and Credit Bank (“KICB” or the “Bank”), an existing IFC client, one of the most active providers of financial services to private sector of the Kyrgyz Republic.

IFC would play an important developmental role by providing KICB with additional longer term resources for on-lending to Small and Medium Enterprises (SMEs), which have limited access to long-term funding. In addition, IFC’s trade finance guarantee facility will support access to trade finance for local exporters and importers and address the counterparty risk that is slowing down the growth of trade business in the country.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	10.0
Equity

Development Impact

(i) Increase access to finance for SMEs in the country through longer tenor products and trade finance instruments.
(ii) Stimulate growth in underdeveloped markets, support economic recovery through job creation by SMEs in an IDA country.
(iii) Support KICB''s efforts to diversify and increase the volume of their funding base and to better manage their assets and liabilities.
(iv) Support the development of trade finance sector in Kyrgyz Republic.

(i) Catalyzing growth of SME finance: IFC would support KICB in expanding its SME lending, a key factor to alleviate poverty Kyrgyzstan, as well as to generate employment.
(ii) Increase long-term funding: IFC would provide KICB with additional long-term funding to finance SMEs, thus creating demonstration effect for other commercial investors to engage with KICB on a long-term basis
(iii) Developing trade finance sector in Kyrgyz Republic: Improve access to finance for local exporters and importers and address the counterparty risk that is slowing down the growth of trade business in the country.

E&S Category Rationale / Risks and Mitigation

The proposed project is with the existing IFC client 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 KICB’s existing SME portfolio, as the primarily purpose of this IFC loan is to on-lend to the SME sector, as well as the bank’s overall portfolio for any residual risk. The key sectors financed from the SME portfolio are trade and agriculture. These business activities 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 activities supported with this IFC loan, the client will be required to demonstrate ongoing compliance of its SME loan portfolio with the IFC Exclusion List and national E&S laws of the Kyrgyz Republic, as well as ensure ongoing compliance of its employment practices with the IFC Performance Standard 2: Labor and Working Conditions and regularly report its E&S performance in accordance with the format to be provided by IFC.

No inherently high E&S risk projects will be financed from the bank’s SME portfolio, which will be supported with this IFC loan. KICB’s Operating Policy sufficiently incorporates IFC’s and other IFIs’ E&S requirements and outlines procedures for E&S risks assessment and monitoring. The bank has designated E&S staff. However, the review of KICB’s loan files indicated some inconsistencies in ESMS practical implementation, lack of guidance for loans officers on ESMS implementation and weak recording of E&S risk evaluation findings, which shall be addressed by the bank prior to the new loan disbursement. The corresponding training shall be provided to the SME lending staff. The Bank has sufficient human capacities to manage the ESMS. KICB was found to be in compliance with PS2 on labor and working conditions.

Task Description	Anticipated Completion Date
Appoint an additional ESMS officer to cover SME portfolio	Condition of Commitment
Formalize ESMS and improve records-keeping and reporting	Condition of Disbursement
Develop sector guidelines for the largest financed SME sectors	Within 3 months from Disbursement
Train all staff involved in SME lending on the enhanced ESMS procedures and E&S risk management	Condition of Disbursement and then ongoing
Submit ESMS implementation report with the corresponding ESDD examples	Within 6 months of Disbursement

Contacts

For Inquiries About the Project, Contact

Mr. Kwang-Young Choi
CEO, Chairman of the Management Board
Kyrgyz Investment and Credit Bank (KICB)
21 Erkindik boulevard
Bishkek 720040,
Kyrgyz Republic.

Phone: (+996 312) 620 101
Fax: (+996 312) 620202
Email: mailto:kychoi@kicb.net

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