43585 - Priorbank & Raiffesen Leasing Belarus Green Housing

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Summary of Investment Information

Project Number

43585

Company Name

PRIORBANK OAO

Date SPI Disclosed

May 27, 2020

Country

Belarus

Region

Europe

Projected Board Date

Jun 29, 2020

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Nov 18, 2022

Department

CF2S8 - Regional Industry - FIG - ECA/FIG Inv Operations - ECA

Industry

Financial Markets

Previous Events

Approved : Jul 7, 2020
Signed : Dec 15, 2020
Invested : Jan 4, 2021

Sector

Commercial Banking - Housing Finance

Project Description

The project entails a total financing package of up to US$75 million equivalent in Belarusian Rubble (“BYN”) for Priorbank Joint-Stock Company (“Priorbank”, or “the Bank”), an existing IFC client in Belarus, and its subsidiary JLLC Raiffeisen Leasing (“RLBY” of “the Company”). The package consists of the following components:

1) Up to US$50 million equivalent in a 7-year senior housing finance loan to Priorbank (“Priorbank Housing Loan”). The loan would be used for on-lending to mortgage borrowers including green mortgages, and/or for energy efficiency home renovation loans in Belarus. At least 50% of the Housing Loan proceeds will be used for eligible climate finance, which includes green mortgages and/or energy efficiency home renovation loans.

2) Up to US$25 million equivalent in a 7-year senior housing finance loan for RLBY (“RLBY Housing Loan”). The Loan proceeds will be used for on-lending to mortgage borrowers through financial leasing of residential property in the country, with at least 50% of the proceeds to be on-lent for eligible green mortgages.

Associated Advisory Engagement

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	75.0
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	Housing Finance
Straight Senior Loan	Consumer Loans
Straight Senior Loan	Housing Finance

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

Development Impact

The most significant expected development impact resulting from the project involves: i) Increased access to housing finance in Belarus. Availability and affordability of mortgage funding in the country is very limited, largely hindered by lack of long-term local currency funding. ii) Increased access to climate finance in the country through green mortgages and energy efficiency home renovation loans. At least 50% of the loan proceeds will be channeled towards climate finance, helping the country achieve its green house gas reduction targets in line with National Sustainable Development Strategy. iii) Increased competitiveness in the green housing finance in the country: Successful introduction of the green mortgage and energy efficiency home renovation products and growth of these portfolios might resonate through the market and inspire other financial institutions in the country to follow suit and introduce retail climate finance products.

IFC's expected additionality in the project is both financial and non-financial: i) IFC will provide scarce long-term, local currency funding to Priorbank and RLBY, by disbursing 7-year senior local currency loans with a 2-year grace period. ii) IFC will support Priorbank and RLBY to develop and grow their retail climate finance business (green mortgages and energy efficiency home renovation) and will help the Bank and the Company to implement IFC's Climate Assessment for Financial Institutions (CAFI) tool for flagging and reporting on sustainable energy loans. IFC will introduce its EDGE certification system for green buildings to help the Bank and RLBY build their green housing portfolios.

E&S Category Rationale / Risks and Mitigation

The proposed IFC investment consists of senior loans of up to US$50 million equivalent to JSC Priorbank and up to US$25 million equivalent to JLLC Raiffeisen-Leasing, both subsidiaries of Raiffeisen Bank International AG in Belarus to be used for housing finance and leasing of houses with residential energy efficiency. E&S risks of such investment are considered to be low and the project is categorized as FI-3 in accordance with the IFC’s Sustainability Policy. The Bank will need to comply with Life & Fire safety requirements and the requirements of IFC’s Performance Standard 2 on Labor and Working conditions.

Given the E&S risk nature of this project, development of a robust ESMS was not needed.

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