35540 - Access Sub-debt

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Summary of Investment Information

Project Number

35540

Company Name

ACCESSBANK CJSC

Date SPI Disclosed

Oct 31, 2014

Country

Azerbaijan

Region

Europe

Projected Board Date

Dec 2, 2014

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Nov 30, 2016

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Dec 2, 2014
Signed : Jul 16, 2015
Invested : Aug 17, 2015

Sector

Commercial Banking - Microfinance

Project Description

The proposed project consists of a subordinated loan of up to US$25 million to AccessBank CJSC (“AccessBank”), the market leader in microfinance in Azerbaijan and an existing investment partner of IFC. The proposed investment would be used to support the Bank’s capital base, enabling it to implement its growth strategy.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	25.0
Equity	0.0

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
Quasi-Equity	Loans to Microfinance Borrowers

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

Development Impact

i) Financial Inclusion: Support growth of the Bank''s MSME sector portfolio and increase access to finance for MSMEs
ii) Job Creation: The proposed Tier II capital will enable the Bank to on-lend to a large number of MSMEs through the multiplier effect of increasing the capital base, and indirectly contribute to greater job creation.
iii) Economic Diversification: Support the development of the non-oil sector in Azerbaijan
(iv) positive impact on economic development and poverty alleviation in the country.

(i) Positive Signal to the Market: As a founding shareholder of the Bank, IFC''s continued engagement and support of the Bank, through a large subordinated loan facility and reinforcement of capital base will send a positive signal to the market showing IFC''s confidence in the Bank.
(ii) Longer Tenor: IFC will be providing the much needed longer-term funding to support the Bank''s growth. Although Accessbank has received strong financing support from various IFIs and other investors, funding at longer maturities is not easily available in the market.
(iii) Capital Support: The subordinated loan facility will strengthen the Bank''s capital base and bridge the funding gap as a result of the Bank''s rapid growth. Management''s strategy is to capitalize the Bank and position it for further growth by raising Tier II capital in order to continue expanding in the MSME segment.

Indicator	Metrics	Comments	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
Access to Finance: Outstanding Microfinance Portfolio ($)	Outstanding Portfolio ($)		Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

The proposed project is to provide a (i) subordinated loan of up to US$25.0 million to Accessbank, the existing IFC client. It has been categorized as category FI-2 according to the IFC Environmental and Social Review Procedure. Accessbank provides retail, SME and micro loans. The bank’s SME and micro lending activities support primarily sectors such as trade, services and agriculture. The bank has also minor exposures to general manufacturing and transportation. The bank is not exposed to/involved in long term asset development through project or corporate financing. These business activities supported by Accessbank 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. Accessbank will be required to ensure compliance of its lending operations with IFC Exclusion List, environmental and social laws of Azerbaijan and compliance of its own operations with IFC Performance Standard 2: Labor and Working Conditions.

The key risks and impacts of the project are associated with the bank’s agenda to increase its market presence by targeting the micro and SME segments more aggressively with increased competition from other banks, which are not required to follow a thorough E&S risk management practices. Although Accessbank has developed and maintained an ESMS in line with the IFC E&S requirements, there is still a need for increased engagement of bank's management in day-to-day E&S risk management and more training for relevant staff on ESMS implementation. The bank will need to revise its current categorization procedure and extend ESMS to cover its micro-finance operations. The Bank was found to be in compliance with PS2 on labor and working conditions.

Contacts

For Inquiries About the Project, Contact

Farida Pirverdiyeva
Accessbank CJSC
137 Alofsat Guliev StreetAz-1000 Baku, AzerbaijanTel: (+994 12) 493 0726
Fax: (+994 12) 493 0796

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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
Formalize procedures	12/30/2014
Develop guidelines	12/30/2014
Staff Training	12/30/2014

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