33733 - UniCredit Rom

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Summary of Investment Information

Project Number

33733

Company Name

UNICREDIT BANK SA

Date SPI Disclosed

Jun 21, 2013

Country

Romania

Region

Europe

Projected Board Date

Jun 21, 2013

Environmental Category

FI-1 - Significant

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Jun 20, 2013
Signed : Jun 21, 2013
Invested : Jun 28, 2013

Sector

Commercial Banking - General

Project Description

The proposed project consists of an IFC senior debt investment of up to US$75 million mainly in a bond to be issued by UniCredit Tiriac Bank S.A. (“UCTB”, or the “Bank”), which would be a new client for IFC in Romania. IFC may also provide a loan to finance local SMEs at a later stage.UCT is the fifth largest bank in Romania with total assets of EUR5.7 billion, equity of EUR609 million, and net income of EUR40 million as of the end of December 2012. UCT offers a wide range of banking services with a nationwide presence and has a history of over 20 years on the local market. The bank resulted after subsequent mergers in 2006-2007 of 3 mid size banks in Romania: Banca Tiriac, HVB and UniCredit Romania. With 6.9% market share, a national network of around 200 branches, for approximately 600,000 clients, UCT remained profitable throughout the financial crisis.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	74.98
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
Straight Senior Loan	Loans to SME Borrowers

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

Development Impact

1. Demonstrate the ability of a Romanian bank to attract long-term funding from local and international investors in difficult financial times. IFC''s investment in UCT in an environment of economic and political volatility is expected to boost investor confidence in the Romanian banking sector. This investment is expected to be a catalyst for other bond issues to follow.
2. Allow the Bank to become less dependent on funding from its parent, and enhance local funding mechanism that allows the Bank to grow its lending operations, in particular to SME. IFC''s investment will be instrumental to the Bank''s lending operations and the financial sector as a whole, in providing for an important source of local currency funding, i.e. a domestic bond market.

1. IFC would be an investor in the bond, purchasing up to 25% of the issuance if needed, and provide long-term financing, including for SMEs, which is not readily available in the market.
2. IFC would invest in a local currency denominated Bond, helping the Bank raise local currency funding at maturities generally not available in the market.
3. IFC would assist the Bank to further develop its ESMS, ensuring compliance with the IFC Exclusion List, Host Country Laws and Regulations, and the IFC Performance Standards for high risk projects.

Indicator	Metrics	Comments	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
CORE - E and S Management Systems (Y/N)	Compliance/Enhancement		Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

This project involves supporting a bond issue by Unicredit Tiriac Bank and a senior loan-type investment of up to $75 mn equivalent to the Bank, a potential new client for IFC in Romania. The bank''s portfolio includes loans to SMEs as well as project and corporate finance in sectors such as real estate, financial companies, construction, energy, food, beverages and tobacco and agriculture, some of which may have medium to high E&S risks. Given the bank''s large exposure to sectors such as energy and agribusiness, the project has been classified as FI-1 according to IFC''s Sustainability Framework. For this particular project, IFC''s applicable requirements will be to ensure that the Bank''s entire portfolio is screened against the IFC Exclusion List, the applicable environmental and social national laws and regulations, and the IFC Performance Standards for all project/corporate finance activities. In addition the Bank will comply with the requirements of IFC’s PS2 on Labor and Working conditions.

The main E&S risks and impacts of this investment relate to Unicredit Tiriac having adequate systems and capacity in place to manage the operations being financed in accordance with applicable requirements, including compliance with the IFC’s Exclusion List, Host Country Laws and Regulations and IFC Performance Standards.
Unicredit Tiriac does not have a documented ESMS but the Bank''s credit manual include some procedures in line with Equator Principles. The bank will need to establish an ESMS which will include compliance with the applicable requirements above, and nominate officers responsible for its implementation. The bank’s HR practices are in general in conformity with IFC''s PS2 on Labor and Working conditions.

Contacts

For Inquiries About the Project, Contact

Gabriel Tinta
First Vice President, Head of Asset Liability Management
UniCredit Tiriac Bank S.A.
1F Expozitiei Blvd.
RO-012101, Bucharest 1
Tel.: +40 21.200.10.70
Fax: +40 21.200.19.12
E-mail: mailto:gabriel.tinta@unicredit.ro

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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.

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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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Task Title & Description	Anticipated Completion Date	Status	Comments	Completion Date
Nominate officers		Completed	Completed
Establish SEMS		Completed	Completed
Develop guidelines		Completed	Completed
Staff Training		Completed	Completed
Enhance the Bank's HR practices		Completed	Completed

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