44005 - WCS COVID Ineco

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Summary of Investment Information

Project Number

44005

Company Name

INECOBANK CJSC

Date SPI Disclosed

Sep 11, 2020

Country

Armenia

Region

Europe

Projected Board Date

Jul 8, 2020

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Aug 27, 2021

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Jul 8, 2020
Signed : Aug 3, 2020
Invested : Sep 1, 2020

Sector

Commercial Banking - Trade and Supply Chain

Project Description

The Project consists of a senior loan of up to US$20 million to Inecobank CJSC (“Inecobank”). The loan to Inecobank would be under WBG Fast Track COVID-19 Facility, in particular IFC’s Financial Institutions Response Envelope. The loan consists of two tranches.
The purpose of the loan is on-lending to MSMEs. Many of Inecobank’s MSME-clients face lower revenues, higher costs, supply disruptions, complicated inventory management, and pricing power erosion resulting from the COVID19 outbreak. Therefore, they need working capital liquidity as short-term bridge financing to continue operating, providing vital employment, goods, and services, and generating tax revenues.

Inecobank is the fifth-largest bank in Armenia, established in 1996 and is the third largest provider of SME loans in Armenia.

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)
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 largely by our countercyclical role during crises. The FIG Facility component contributes: successful experience with rapid crisis response efforts, an extensive network of banks that support emerging markets; programs aimed at investing both large scale and transactional liquidity and capital for trade and working capital finance and mobilization capacity.

Indicator	Metrics	Comments	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
CORE - E and S Management Systems (Y/N)	Compliance/Enhancement		Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

The project is classified as FI-2 according to IFC's Sustainability Policy. The key sectors in Inecobank’s MSME portfolio are low-medium risk activities such as wholesale and retail trade, light manufacturing, food and beverage production, transport and communication. Most of the portfolio to be supported through this project is expected to have potential limited adverse environmental or social risks or potential impacts that are few in number, generally site specific, largely reversible, and can be readily addressed through mitigation measures.

Given the nature of this investment, the Project will not support coal-related and higher risk activities involving 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.

Applicable E&S requirements for this investment will be IFC Exclusion List and the national environmental and social laws and regulations. In addition, Inecobank will comply with the requirements of IFC’s Performance Standard 2 on Labor and Working conditions.

The main E&S risks and impacts of this investment relate to Inecobank having adequate systems and capacity in place to manage the operations associated with their lending activities to MSMEs being financed in accordance with IFC’s applicable requirements.

Summary of Client Environmental and Social Management System (ESMS)

As an existing IFC client, Inecobank has an Environmental and Social Management System (“ESMS”) in place applicable to the entire portfolio and trained ESMS team. The Bank will be required to continue implementing ESMS to ensure its investments in asset class are in compliance with the applicable E&S requirements and retain proper internal capacity by providing E&S training to staff responsible for the ESMS implementation.

Contacts

For Inquiries About the Project, Contact

Inecobank CJSC
Hayk Voskanyan
CFO
+37410510510
Hayk.Voskanyan@inecobank.am
Head Office 17 Tumanyan Street Yerevan, Armenia
www.inecobank.am

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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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