33031 - Unibank SME

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Summary of Investment Information

Project Number

33031

Company Name

UNIBANK OJSC

Date SPI Disclosed

Apr 30, 2013

Country

Armenia

Region

Europe

Projected Board Date

Jun 3, 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 : Dec 5, 2013
Signed : Dec 19, 2013
Invested : Apr 29, 2014

Sector

Commercial Banking - General

Project Description

The IFC will provide a medium-term loan of up to US$10 million to Unibank closed joint-stock company (the “Bank”) to on-lend to eligible small and medium sized enterprises in Armenia. Unibank, established in 2001, is one of leading banks in Armenia with operations across the country.

The project aims to facilitate access to finance to Armenian SMEs and, hence, support recovery of the Armenian economy from the consequences of the global financial crisis. IFC’s investment would be complemented by related advisory services that meet the Bank’s strategic needs and enhance its risk management practices and SME lending capacity. SMEs in Armenia are underserved by the banking sector due to the limited supply of long-term financing. This lack of financing is one of the reasons of the slow development of the private SME sector in the country. The proposed Project will: (i) increase the amount of funding available for SMEs, in partnership with one of Armenia’s leading banks, and (ii) foster competition among the Armenian banks for lending to SMEs which will support the sustainable development of the SME sector in Armenia.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	5.0
Equity

Development Impact

The development impact of the project is expected to be significant in terms of its support for local businesses in real economy. By providing financing to the Bank, IFC will enable the Bank to expand its SME lending operations and provide commercial financing to businesses in a variety of sectors, therefore fostering economic growth through job creation. In addition, the project will have an important demonstration effect to other foreign investors. By enabling the Bank to expand its "commercially-priced" funding base, the project should have a meaningful contribution to building a viable banking system in Armenia.

IFC will provide financing, including a parallel loan mobilized from a partner IFI, with longer maturity than available in the market. Without IFC, the Bank would continue to fund its operations primarily with short-term retail deposits which results in a greater mismatch between assets and liabilities and more expensive financing for SME customers. Through advisory work, in combination with the IFC''s investment, IFC will help the Bank implement the improvements in policies and procedures for risk governance and SME credit processes.

E&S Category Rationale / Risks and Mitigation

The proposed project is with the new IFC client to provide an IFC A-Loan of up to US$10 million to Unibank to support its lending activities to Armenian small and medium enterprises.

The proposed portfolio entails mainly potentially limited adverse E&S risks and impacts that are generally site-specific, largely reversible and readily addressed through mitigation measures. The project has therefore been categorized as FI-2 in accordance with IFC’s Environmental and Social Review Procedure. The Bank will be required to screen all SME loans against the IFC Exclusion List and national E&S laws.

The key risks is the ability of the Bank to identify and manage the environmental and social risks associated with its lending activities, in particular lending to projects associated with construction, and food and beverages. Additional E&S risks and impacts of the Project derive from the capacity and systems in place to manage these risks. At present Unibank has developed an Environmental and Social Management System (ESMS) outlining the procedures for undertaking E&S risk management of its lending activities. No staff/department has been assigned responsibility for E&S due diligence and monitoring, and training needs to be provided to all staff involved in the ESMS implementation. The Bank was found to be partially in compliance with the requirements of the IFC Performance Standard 2: Labor and Working Conditions.

Contacts

For Inquiries About the Project, Contact

Unibank closed joint-stock company
12 Charents str., N 53, N1-5
0025 Yerevan, Armenia Phone: (37410) 59-22-59, Fax: (37410) 55-51-40

For Inquiries and Comments About IFC, Contact

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Washington DC 20433
Telephone: 202-473-3800
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Local Access of Project Documentation

Unibank closed joint-stock company
12 Charents str., N 53, N1-5
0025 Yerevan, Armenia Phone: (37410) 59-22-59, Fax: (37410) 55-51-40

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/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

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.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

Task Title & Description	Anticipated Completion Date	Status	Comments	Completion Date
Nominate officers		Completed	Completed	12/13/2013
Establish SEMS		Completed	Completed	12/03/2014
Formalize procedures		Completed	Completed	02/23/2014
Staff Training		Completed	Completed	01/24/2014

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