Summary of Proposed Investment
Project Number
11166
Company Name
SMALL BUSINESS CREDIT BANK
Date SPI Disclosed
Feb 25, 2002
Country
Russian Federation
Industry
Financial Markets
Projected Board Date
Apr 1, 2000
Status
Completed
Sector
Commercial Banking - Microfinance and Small Business
Department
Global Industry, Financial Markets
Environmental Category
FI
Previous Events
Approved : May 29, 2002
Signed : May 31, 2002
Invested : Jul 29, 2002
Project Description
On initiative of the EBRD, KMB Bank started operations in 1992 as the Russian Project Finance Bank, focusing on project finance. The bank was subsequently converted into an institution specializing in financing small businesses, and started operations with this new focus in late 1998. KMB makes loans to privately-owned micro, small, and medium-sized enterprises (SMEs), and provides a range of other financial service. Its lending activity has a regional focus, and future plans include expansion in the Urals, Siberia, and the European part of Russia.
Development impact
Given the focus of KMB''s business plan on regional expansion and the SME sector, by helping the bank maintain its rapid growth trend, IFC will be supporting the development of the key business sector in Russia, especially in areas that are away from the better-banked Moscow region. The development impact of the project is expected to be threefold: (i) supporting expansion of the SME sector which in Russia is still underdeveloped compared with other countries in Central and Eastern Europe; (ii) regional development, as KMB will emphasize expansion outside the better-banked Moscow and St. Petersburg regions; and (iii) financial sector development, by contributing to the growth of banking services aimed at SMEs, and hopefully serving as a demonstration model to other banks that are considering moving into the sector.
IFC’s Role
Currently, there are virtually no commercial sources of long-term funding for banks in Russia unless they belong to one of the big financial/industrial groups. KMB''s access to funding from existing sources (primarily EBRD) has been exhausted and its deposit base is still small, short term, and it will take considerable time and effort to develop into a reliable source of funding. At the same time, funding on the inter-bank market is very short-term and expensive. IFC financing will provide resources which are essential for KMB to expand its lending activities and to broaden the range of its services by making larger loans to serve its best SME customers, in addition to micro-enterprises and to increase profitability. Finally, by taking a Board seat, IFC will be able to provide input into the bank''s operations and further development.
Development impact
Given the focus of KMB''s business plan on regional expansion and the SME sector, by helping the bank maintain its rapid growth trend, IFC will be supporting the development of the key business sector in Russia, especially in areas that are away from the better-banked Moscow region. The development impact of the project is expected to be threefold: (i) supporting expansion of the SME sector which in Russia is still underdeveloped compared with other countries in Central and Eastern Europe; (ii) regional development, as KMB will emphasize expansion outside the better-banked Moscow and St. Petersburg regions; and (iii) financial sector development, by contributing to the growth of banking services aimed at SMEs, and hopefully serving as a demonstration model to other banks that are considering moving into the sector.
IFC’s Role
Currently, there are virtually no commercial sources of long-term funding for banks in Russia unless they belong to one of the big financial/industrial groups. KMB''s access to funding from existing sources (primarily EBRD) has been exhausted and its deposit base is still small, short term, and it will take considerable time and effort to develop into a reliable source of funding. At the same time, funding on the inter-bank market is very short-term and expensive. IFC financing will provide resources which are essential for KMB to expand its lending activities and to broaden the range of its services by making larger loans to serve its best SME customers, in addition to micro-enterprises and to increase profitability. Finally, by taking a Board seat, IFC will be able to provide input into the bank''s operations and further development.
Sponsor / Cost / Location
Development Impact
Related ESRS/ERS
Contacts
For Inquiries About the Project, Contact
Reiner Muller-Hanke, CEO
15/7. 1st Neopalimovsky per., Moscow 119121, Russia
Phone: 7-095-967-3061
Fax: 7-095-967-3060
15/7. 1st Neopalimovsky per., Moscow 119121, Russia
Phone: 7-095-967-3061
Fax: 7-095-967-3060