49651 - RSF Midcaps Raiffeisen Bank Ukraine

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Summary of Investment Information

Project Number

49651

Company Name

Raiffeisen Bank JSC

Date SPI Disclosed

Jul 24, 2024

Country

Ukraine

Region

Europe

Projected Board Date

Aug 30, 2024

Environmental Category

FI-2 - Limited

Status

Pending Approval

Last Updated Date

Sep 10, 2024

Department

CF6E2 - Regional Industry FIG LAC & EUR/FIG EUR2 Pol, Ukr, Mold, S Cauc

Industry

Financial Markets

Sector

Commercial Banking - General

Project Description

The proposed investment consists of an unfunded risk sharing facility (RSF) with Raiffeisen Bank JSC (Raiffeisen Bank, or the Bank) for a portfolio of up to €150 million (c.US$165 million equivalent) consisting of term loans, guarantees, and other eligible facilities to medium-sized and larger companies (Midcaps and Midcap Facilities, respectively) in Ukraine. IFC’s risk participation will be up to €50 million (c.US$55 million equivalent), or 33% of the aforementioned RSF portfolio, including the possibility of IFC mobilizing third-party unfunded participation in the RSF. It is anticipated that eligible Midcap Facilities extended to finance renewable energy and energy efficiency projects (Clean Energy Solutions) will represent approximately 30% of the RSF portfolio, thereby supporting Ukraine’s energy security.

The Project is expected to be supported by Blended Finance contributors under the Economic Resilience Action Program (ERA) for Ukraine, as described in the Blended Finance section.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	52.89
Loan
Equity

Development Impact

IFC's additionality is driven by its countercyclical role during crises, especially when the appetite of other lending institutions is subdued, through de-risking instruments for financial institutions serving Midcaps and providing comfort to midcap finance providers and international and domestic investors. Moreover, IFC's advisory services team provides global expertise on RSFs and complements each risk-sharing project with an advisory services project that aims to provide operational implementation support. In this regard, IFC will play an important role in transferring expertise and knowledge, which is expected to have a positive impact on the overall operations and activities of Raiffeisen Bank.

E&S Category Rationale / Risks and Mitigation

The RSF portfolio will consist of eligible Midcap Facilities, including those for financing Clean Energy Solutions. The Project has been categorized as FI-2 according to IFC’s Sustainability Policy. The expected portfolio to form the RSF will comprise medium environmental and social (E&S) risk investments with potentially limited adverse environmental or social risks or impacts that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures. The Project will not support (i) any activities on the IFC Exclusion List, (ii) coal-related activities, (iii) hydropower plants, (iv) offshore winds farms, (v) solar photovoltaic (PV) installations other than those purchased by eligible Midcap borrowers for their own consumption, and (iv) 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, d) significant retrenchment, and/or e) significant occupational health and safety risks. For this Project, IFC’s applicable E&S requirements will be the IFC Exclusion List, the applicable environmental and social national laws and regulations, and screening out higher E&S risk transactions as contemplated in the Performance Standards. The Bank will additionally be required to be in line with the life and fire safety requirements of the Performance Standard 4, and requirements of IFC’s Performance Standard 2 on Labor and Working Conditions. The main E&S risks and impacts of this investment relate to the clients having adequate systems and capacity in place to manage the operations being financed in line with the IFC’s applicable E&S requirements.

The Bank has an E&S Policy developed and applied towards corporate loans above €5 million. The Policy is guided by the Group Policy and in line with requirements of other lenders. The Policy provides for E&S risks categorization of projects and detailed procedure for assessment of E&S risks, delineates responsibilities for considering E&S risks throughout the credit cycle, contains sufficient tools and forms to record Environmental and Social Due Diligence (ESDD) outcomes and recommendations, and describes procedures of E&S risks monitoring and reporting. For this Project, the Bank would need to enhance the existing policy and procedures by developing additional procedures for management of E&S risks of the RSF portfolio in line with the IFC E&S requirements. This will include but not limited to developing tools to screen out all non-eligible activities mentioned above, and building internal/external capacity as needed. The Bank has assigned E&S officer who will be responsible for the implementation of these procedures for RSF. Regular training programs will be delivered to the staff responsible for E&S risk management as per the training plan and as outlined in Environmental and Social Action Plan (ESAP).

S.no	Title	Anticipated Completion Date
1	Enhance ESMS in line with IFC’s requirements to cover all loans eligible for financing under the RSF	10/15/2024
2	Submit E&S training plan	10/15/2024
3	Build proper internal/external capacity including training plans	01/15/2025
4	Submit ESDD procedures implementation records	04/15/2025

Contacts

For Inquiries About the Project, Contact

Raiffeisen Bank Joint Stock Company
Ruslan Spivak
Director: Institutional Clients, Investment Banking & Strategy
+380 66 222 29 43
fi@raiffeisen.ua
4A Almazova Street, 01011, Kyiv
https://raiffeisen.ua/en

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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.

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Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

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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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