41848 - TBC Uzbekistan Equity

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Summary of Investment Information

Project Number

41848

Company Name

Joint-Stock Commercial Bank TBC Bank

Date SPI Disclosed

Oct 30, 2020

Country

Uzbekistan

Region

Central Asia and Turkiye

Projected Board Date

Nov 30, 2020

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Jul 31, 2025

Department

Regional Industry FIG MCT

Industry

Financial Markets

Previous Events

Approved : Dec 14, 2020
Signed : Sep 30, 2021
Invested : Dec 14, 2021

Sector

Commercial Banking - SME Finance

Project Description

The project entails IFC’s equity investment in Uzbekistan to support TBC Bank Group PLC, (TBC or the Sponsor) in developing a newly formed bank (TBC UZ) that will focus on lending to underserved, fast growing retail customers, micro, small and medium enterprises (MSMEs). It will be a next-generation banking ecosystem with a strong emphasis on digital offering, using high quality contemporary banking practices transposed from the Sponsor’s Georgian operations. In the growing Uzbek market, it will operate by using the latest technology of digital and partnership-driven channels, automation, modern branch network, and lean operational practices. The Sponsor invested initial capital and TBC UZ received the full banking license in April 2020. IFC will invest up to US$10 million for a minority stake of c.20% alongside the Sponsor, EBRD and Uzbek Oman Investment Company LLC. Any further equity investments by IFC remain subject to IFC’s full discretion.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	10.0

Development Impact

The most significant Project-level outcome is increased access to finance for underserved segments in the economy, namely mortgage borrowers, MSMEs, and other retail borrowers, which will comprise the entire loan book the TBC UZ. The project is expected to contribute to increased competitiveness of the banking sector through innovation, competition, and demonstration channels. Should TBC UZ prove successful, this will invite other private investors into the Uzbek banking sector. In addition, strong operational performance focused on modern branches and digital channels is expected to push traditional banks towards innovation and increased efficiency.

i) IFC will provide own account equity to help establish a modern, efficient, and profitable private bank in a country in which private sector investment in the banking sector has been negligible over the past three years. ii) In addition, IFC will provide non-commercial risk mitigation, providing comfort to the Sponsor to invest in a country which is undergoing a major economic transformation.

E&S Category Rationale / Risks and Mitigation

The project is an IFC’s equity investment in Uzbekistan to support TBC Bank Group PLC, in development of a newly formed bank (TBC UZ) that will focus on lending to underserved, fast growing retail customers, micro, small and medium enterprises (MSMEs). TBC UZ will be focusing on retail (primarily cash loans, salary-backed loans, POS, and car loans), mortgages and MSME loans. Overall E&S risks associated with these transactions are considered as low to medium and, as such, the project has been categorized as FI-2 according to the IFC’s Sustainability Policy. IFC’s applicable E&S requirements will include application of the IFC Exclusion List, and host country’s E&S laws and regulations. TBC UZ will be required to not support any activities in the IFC exclusion list and coal related activities. Based on the bank’s business strategy, it is expected that it will not provide corporate or project finance loans as well as loans to higher risk activities including: (a) involuntary resettlement; (b) risk of adverse impacts on Indigenous Peoples; (c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage; or (d) significant occupational health and safety risks. In addition, TBC UZ will need to be in line with Life & Fire safety requirements and the requirements of IFC’s Performance Standard 2 on Labor and Working conditions.

The project’s key E&S risks and impacts are associated with the bank’s capacity to operate the Environmental and Social Management System (ESMS) to meet the E&S applicable requirements, as well as to sufficiently manage cotton sector related forced labor risks in its supply chain and at the bank level.

IFC will periodically disclose the names, locations and sectors for Category A and/or other qualifying sub-projects that have been supported by this IFC investment through financial intermediaries, subject to regulatory constraints and market sensitivities. Any qualifying sub-project(s) will be disclosed during the annual reporting cycle established with the client. No sub-projects met the criteria for disclosure during the 2024 reporting cycle.

For any business line outside of retail and mortgage, TBC UZ will adapt TBC Georgia’s ESMS practices which will be customized accordingly to manage E&S risks in country as per the agreed Environmental and Social Action Plan. TBC Bank Georgia has established and implements sufficient ESMS at the Group level, which is in line with the IFC’s requirements. This project is subject to IFC’s disclosure policy and IFC will disclose a summary of the bank’s ESMS after its implementation. While no long-term corporate and project finance lending are expected, should the bank change its business strategy while IFC is a shareholder, it will be required to upgrade its ESMS to manage the E&S risks of those projects as well as to allow IFC to disclose any Category A sub-projects.

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Task title & Description	Anticipated Completion Date
Appoint ESMS staff	COD
Develop ESMS	Prior to introduction of MSME lending (end of 2021)
Staff training	Prior to introduction of MSME lending (end of 2021)
Enhance HR procedures	COD
Submit ESMS implementation report including records of E&S assessments	Within 6 months from ESMS implementation

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