33859 - NBD SME Loan2013

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Summary of Investment Information

Project Number

33859

Company Name

PUBLIC JOINT STOCK COMPANY NBD BANK

Date SPI Disclosed

Sep 12, 2013

Country

Russian Federation

Region

Europe

Projected Board Date

Oct 31, 2013

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Jan 28, 2014
Signed : Mar 25, 2014
Invested : Jul 29, 2014

Sector

Commercial Banking - SME Finance

Project Description

The proposed project will support NBD Bank (NBD or the “Company”), a long-standing client of IFC focusing on lending to small and medium enterprises in the Volga and Central Federal Districts of Russia. The project will consist of a 3-year senior unsecured loan in the amount of up to RUB600 million (approximately US$18 million) for on-lending to NBD’s SME clients.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	13.70
Equity

Development Impact

The Project is expected to have a significant development impact as it would enhance NBD''s ability to lend to SMEs. The Project would enable the Company to offer a wider range of financing instruments to underserved SMEs, and encourage the Company to continue developing its SME lending with matched funding that would be available with IFC''s proposed loan. Long-term financing is crucial for the sustainable development of the private sector across the country that would result in improved economic development and improved living conditions. As NBD operates in the regions considered frontier by IFC definition, the Project will be aimed at providing access to finance to the most financially underserved Russian markets.

IFC would play a strong developmental role by supporting an experienced and well-run financial institution with its core competency of lending to SME clients in frontier regions of Russia.
(i) Longer Term Funding: Russian banks are experiencing serious difficulties in sourcing long tenor funds. This shortage severely curtails economic recovery. Under the proposed project IFC will be able to provide local currency funding with longer maturity and better amortization patterns not readily available in the market.
(ii) Access to finance for SMEs: During the crisis Russian banks noticeably reduced lending to the SME sector which they viewed as the most risky. As a result, many Russian SMEs suffer from lack of access to finance. With the help of IFC''s proposed financing NBD will be in a position to considerably accelerate its SME lending activities, particularly in financing of equipment / machinery and capacity expansions which typically require long-term financing.

E&S Category Rationale / Risks and Mitigation

The proposed project is with an existing long-term IFC client to provide a senior loan to NBD for financing SMEs sector in the frontier regions of Central Russia. NBD''s portfolio is mainly focused on SMEs which account for approximately 84% of the total portfolio. The overall portfolio risk associated with this investment is considered to be medium. The project has therefore been categorized as FI-2 in accordance with IFC''s Environmental and Social Review Procedure. The E&S risks and impacts are few in number, generally site-specific, largely reversible and readily addressed through mitigation measures. For this project the client will be required to screen all SME loans against the IFC Exclusion List, and Russian E&S laws and regulations.

NBD as an existing client has developed an Environmental and Social Management System (ESMS) outlining the procedures, responsibilities and tools for undertaking E&S risk management of its lending activities. E&S related due diligence is part of the Company’s loan review process.
The main E&S risks and impacts of the project derive from the E&S risks of the Company''s lending activities, the capacity and systems in place to manage these risks, and the Company''s practices with regard to labor and working conditions. E&S staff have been assigned. NBD was found to be in compliance with the requirements of the PS2 regarding Labor and Working conditions. The client will be required to provide training to E&S staff, continue implementation of its ESMS and submitting AEPRs to IFC.

Key Mitigation Measures: Current client performance is aligned with applicable Performance Standards and EHS Guideline requirements. No ESAP is required.

Contacts

For Inquiries About the Project, Contact

603950 Gorky Square 6Nizhny Novgorod, Russian Federation Tel. +7 831 22 000 22Fax. +7 831 434 39 48
Attention to: Mr. Evgenij Maksakov

For Inquiries and Comments About IFC, Contact

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2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

Local Access of Project Documentation

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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.

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.

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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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