33596 - Hamkor Bank SL

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Summary of Investment Information

Project Number

33596

Company Name

HAMKORBANK JSCB

Date SPI Disclosed

Jul 30, 2013

Country

Uzbekistan

Region

Central Asia and Turkiye

Projected Board Date

Sep 17, 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 : Sep 20, 2013
Signed : Oct 22, 2013
Invested : Jun 30, 2014

Sector

Commercial Banking - SME Finance

Project Description

The proposed project involves a senior loan of up to US$7.5 million to Open Joint Stock Commercial Bank “Hamkorbank” (“Hamkorbank” or the “Bank”). Hamkorbank is a middle-sized private regional bank in Uzbekistan. Its core activities include offering MSME loans, consumer loans, leasing, and trade finance products. IFC’s investment would enable the Bank to expand the scope of its lending program to MSMEs, with main focus on remote areas, which is well aligned with IFC’s financial markets strategy for Uzbekistan.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	7.50
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Loans to SME Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

1) Enable the bank to increase access to finance for MSMEs, largely in remote and rural areas of Uzbekistan, and thus, contribute to employment generation and overall economic development.
2) Build market confidence for other investors to engage with Hamkorbank and the private sector of Uzbekistan on a long-term basis.
3) Promote best banking practices in risk management, E&S, insurance, AML throughout the banking sector and regulations of Uzbekistan by working with Hamkorbank

IFC''s additionality in the Project stems from the following value adds:
1) Provide long term funding to Hamkorbank to support its MSME lending program, especially at a time when such funding is rarely available.
2) Enhance brand of Hamkorbank being a local bank and one of few privately-owned reputable banks in Uzbekistan to facilitate development of a strong banking sector in the country.
3) Share with the bank IFC''s knowledge and experience in emerging banking markets to help the bank improve its performance results against industry benchmarks.

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 Hamkor Bank’s existing MSME portfolio, as the purpose of this IFC loan is to on-lend to the MSME sector. Key sectors financed from the MSME portfolio are trade and services. 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 the bank’s activities supported with this IFC loan, the client will be required to demonstrate ongoing compliance of its MSME loan portfolio with IFC Exclusion List and national E&S laws of Uzbekistan, as well as ensure ongoing compliance of its employment practices with 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 are expected to be financed from the bank’s MSME portfolio. Hamkor Bank has developed an ESMS, which is in line with IFC E&S requirements, and, as part of it, verifies borrowers’ compliance with the IFC Exclusion List and E&S laws and maintains the corresponding records. The review of Hamkor Bank’s loan files indicated some minor inconsistencies in ESMS practical implementation, which shall be addressed by the bank prior to loan disbursement, and the corresponding training shall be provided to the MSME lending staff. The Bank has sufficient human capacities to manage the ESMS. Hamkor Bank was found to be in compliance with PS2 on labor and working conditions.

Key Mitigation Measures:

Key mitigation measures are summarized in the Environmental and Social Action Plan.

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Telephone: 202-473-3800
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E Mail: Webmaster

Local Access of Project Documentation

Mr. Alexander KhanHead of Treasury Department
OJSCB Hamkorbank170119. Uzbekistan, Andijan cityBobur high-street, 85.Tel/Fax + 99871 150-91-28

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.

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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.

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 Description	Anticipated Completion Date
Enhance ESMS in accordance with the IFC recommendations	Condition of Disbursement
Train all staff involved in MSME lending on the ESMS procedures and E&S risk management	Condition of Disbursement
Submit ESMS implementation report with the corresponding ESDD examples	Within 6 months of Disbursement

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