45419 - AIK Banka SME

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Summary of Investment Information

Project Number

45419

Company Name

AIK BANKA AD

Date SPI Disclosed

Jul 19, 2022

Country

Serbia

Region

Europe

Projected Board Date

Aug 31, 2022

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Jan 19, 2023

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Nov 29, 2022
Signed : Dec 16, 2022
Invested : Jan 16, 2023

Sector

Commercial Banking - General

Project Description

The proposed project is an investment with AIK Banka a.d. Belgrade (“AIK Bank”, or the “Bank”), which consists of (i) a guarantee facility under IFC Global Trade Finance Program (GTFP) with a limit of US$10 million for a tenor of up to 12 months; and (ii) a 5-year senior loan for an amount of up to EUR50 million (the Loan); (collectively, the “Project”).

The Loan will support the expansion of the Bank’s lending program to SMEs and at least 20 percent of the loan will be earmarked for climate loans to SMEs. The Project’s objectives include: (i) improving access to finance for SMEs in Serbia with a particular focus on green financing, and (ii) supporting a local player with a regional expansion strategy in a context otherwise dominated by large Western-owned regional banking groups.

Associated Advisory Engagement

Two advisory projects are ongoing with AIK Bank:

ESG Advisory (Project #602281): IFC’s Advisory Service is supporting the Bank in establishing its Environmental and Social (“E&S”) policies and procedures in line with IFC’s standards and good practices. It also involves providing training to build an internal capacity of the Bank’s staff on the Environmental and Social Management System (“ESMS”) implementation. and the board and senior management role on ESMS oversight.

Climate Advisory (Project #603727): IFC’s Advisory Team will assist AIK in developing its climate risk framework as is required by the European Central Bank. As part of the project, IFC plans to deliver a workshop on market context, carrying out climate risk and materiality assessment, portfolio screening, and assisting the Bank in developing a framework and action plan.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	49.67
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 SME Borrowers
Guarantee	Trade

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

Development Impact

IFC's additionality in the Project is both financial and non-financial. Financial additionality is through the provision of longer-term financing whereas non-financial additionality is in the form of (i) standard-setting, as IFC will support AIK to establish its E&S standards; and (ii) knowledge and capacity building as IFC will support the Bank in developing its climate risk framework and will provide climate finance training.

E&S Category Rationale / Risks and Mitigation

The project will support access to finance for SMEs including green financing projects in Serbia. The Bank’s SME sectors are mainly wholesale trade; real estate; sports activities/recreations; food manufacturing; retail trade; crop animal production; construction of buildings and renewable energy projects, mainly small hydroelectric power plants. Overall E&S risks and impacts for the project is medium and, therefore, the project has been categorized as FI-2 in accordance with IFC’s Sustainability Policy. The Project will not support activities on IFC Exclusion List, coal-related activities, and/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. The applicable E&S requirements will include IFC’s Performance Standard, to be applied to greenfield renewable energy (RE) projects to be supported under this project, the IFC Exclusion List and Serbian E&S laws and regulations. Moreover, the Bank will be required to meet Life & Fire safety requirements and the requirements of IFC’s Performance Standard 2 on Labor and Working conditions.

The bank has developed an ESMS that was approved on 29/12/2022, aligning with the IFC E&S requirements for the project. The E&S policy is integrated into the bank's comprehensive credit policy, and E&S risk management is an essential part of the credit risk management decision process. This policy applies to both SMEs and Corporates. The ESMS includes role and responsibilities, overview of ESG local regulations, risk categorization, ESDD tools and External communication Mechanism. The ESDD report is a mandatory component of every loan application, regardless of the assessed ESG risk level. No credit application is processed without an ESDD report, which is kept with the loan documentation and attached to the client's loan application. The E&S due diligence addresses key E&S risks and issues, aligning with the IFC exclusion list and relevant E&S laws. For all greenfield renewable energy projects (wind and solar farms, small hydropower plants) that may have a significant impact on the environment, local communities, biodiversity, etc., the Bank will consider the need to implement ESDD and engage competent external ESG consultants. For large corporates (outside the existing IFC project’s scope), the bank has recently developed an enhanced ESDD tool. The bank has designated E&S staff responsible for overseeing the implementation of the ESMS

S.no	Title	Anticipated Completion Date	Status
1	Nominate officers	09/30/2022	Completed
2	Establish SEMS	10/20/2022	Completed
6	Staff Training	10/20/2022	Completed
9	Other1 - E&S training program	01/18/2023	Completed
10	Other2 - ESMS implementation	04/18/2023	Completed

Contacts

For Inquiries About the Project, Contact

AIK Banka a.d. Belgrade
Jelena Galic
Chief Executive Officer
+381 11 2029 050
jelena.galic@aikbanka.rs
Bulevar Mihaila Pupina 115d, 11070 Novi Beograd
www.aikbanka.rs

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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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