43953 - Evoca WCS Loan

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Summary of Investment Information

Project Number

43953

Company Name

EVOCABANK OPEN JOINT STOCK COMPANY

Date SPI Disclosed

Feb 1, 2021

Country

Armenia

Region

Europe

Projected Board Date

Mar 3, 2021

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Oct 26, 2024

Department

Regional Industry - FIG - ECA

Industry

Financial Markets

Previous Events

Approved : May 6, 2021
Signed : May 20, 2021
Invested : Jun 2, 2021

Sector

Commercial Banking - SME Finance

Project Description

The proposed investment consists of a senior loan of up to US$20 million under IFC’s Working Capital Solutions (WCS) to Evocabank, a new potential client in Armenia, to support lending to the Bank’s MSME clients.

The proposed loan is U.S. Dollars denominated and has a one-year tenor with a renewal option up to two times at IFC’s discretion for the maximum aggregate tenor of three years.

The proposed investment will alleviate the pressure on short term cash requirements for MSMEs that are negatively affected by the COVID-19 pandemic as well as help them to sustain current employment levels by providing them financing for working capital needs. Evocabank with its presence and expertise in MSME segment and its leading position in the MSME digital space is a well-suited partner for IFC to reach out to MSMEs during this crisis.

Associated Advisory Engagement

N.A.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	20.0
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	Loans to MSME (mix of Micro and SME)

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

Development Impact

IFC's additionality is driven by financial structure of the WCS loan during the COVID-19 crisis at a time when the appetite of other lending institutions and investors is subdued. This Project seeks to provide countercyclical financing to support the Bank's lending to Armenian SMEs during COVID crisis. Non-financial additionality will be achieved through knowledge sharing, and capacity building. IFC will provide expertise and knowledge on E&S standards, while promoting and introducing best risk management practices through implementation of IFC's covenants and performance standards.

E&S Category Rationale / Risks and Mitigation

The project with Evocabank involves a senior loan under IFC’s Working Capital Solutions (WCS) to be used for on-lending to MSMEs. The Bank’s MSME sectors are mainly wholesale/retail trading, hotels, manufacturing; real estate with overall E&S medium risks and, therefore, the project has been categorized as FI-2 in accordance with IFC’s Sustainability Policy. The Project will not be used to support any coal-related activities, or higher risk business activities that may include: 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. For this investment, the client will be required to screen MSMEs loans against the IFC Exclusion List, and Armenian E&S laws and regulations. In addition, Evocabank will be required to be in line with Life & Fire safety requirements and the requirements of IFC’s Performance Standard 2 on Labor and Working conditions.

The main E&S risks and impacts of this project will be the ability of Evocabank to identify and manage E&S risks associated with the activities of its MSME projects in line with IFC’s applicable requirements.

Summary of Client Environmental and Social Management System (ESMS)

Evocabank has a simple ESMS in place with basic procedures to manage E&S risks. The ESMS will be required to be enhanced in line with IFC requirements to manage E&S risks of this specific project. Additionally, Evocabank will be required to maintain proper internal capacity by providing an additional E&S training to the relevant staff and develop an internal Grievance procedure in line with the IFC’s Performance Standard 2 on Labor and Working conditions.

Contacts

For Inquiries About the Project, Contact

“Evocabank” Closed Joint Stock Company
Karen Yeghiazaryan
Chairman of Management Board
+374 10 60 55 55
Karen.Yeghiazaryan@evocabank.am
44/2 Hanrapetutyan Street 0010 Yerevan, Armenia
evocabank.am

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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
Staff Training	06/05/2021
Develop training plan	03/05/2021
Enhance the ESMS in line with IFC's requirements	03/05/2021
Improve HR practice in line with IFC PS2	06/05/2021
Submit ESMS implementation records	09/05/2021

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