Summary of Proposed Investment
Project Number
11514
Company Name
Bank Russki Standart AO
Date SPI Disclosed
Apr 26, 2002
Country
Russian Federation
Industry
Financial Markets
Projected Board Date
Jun 14, 2002
Status
Completed
Sector
Commercial Banking - General
Department
Global Industry, Financial Markets
Environmental Category
FI
Previous Events
Approved : Jun 21, 2002
Signed : Jun 24, 2002
Invested : Feb 12, 2003
Project Description
RSB was established in June 1999 as a new commercial and retail bank with a license to conduct full-scale banking operations. Since its creation, RSB has rapidly increased its retail loan portfolio and is well-positioned to become a market leader. The Bank is now considering how to leverage its retail lending experience in order to enter the SME market by applying similar techniques and to build a profitable small business finance operation, focusing on segments of the market where there is most overlap with providing financial services to individuals. As of the end of 2001, the Bank had a strong net worth of US$28.6 million and assets of US$71.2 million equivalent.
Development Impact: The limited development of the financial sector is one of the major weaknesses of the Russian economy. This project would help address these weaknesses in two ways. First, retail banking is very restricted in Russia; only a small percentage of the population have bank accounts, and consumer lending to individuals is minimal. RSB could have a significant impact on the development of the sector, both through its own activities and through the demonstration effect on other banks, resulting in considerable benefits for development of a real retail banking sector in Russia. Second, a significant proportion of RSB''s business will involve lending to SMEs. Whereas in most countries in the region, SMEs have been an engine of economic growth and constitute the backbone of the economy, Russia''s SMEs cannot realize their growth potential due to insufficient access to external financing and lack of financial services. Development of RSB''s SME operations will help broaden SMEs'' access to bank financing.
WBG Strategy and IFC Role: Helping the development of the local banking sector and its recovery from the financial crisis of 1998 is a central part of the World Bank Group''s strategy in Russia. Commercial sources of equity and other long-term funding for Russian banks remain very limited unless they belong to one of the big financial industrial groups. Therefore, IFC’s equity investment in RSB would help the Bank continue its dynamic growth and allow it to leverage its experience in retail lending by building a small business finance operation.
The project will also support IFC’s strategy in Russia by identifying banks which, over time, can grow into substantial commercial lending institutions, and become significant players in the financial sector and the economy in general. RSB is one such institution which requires additional capital as well as the benefit of external corporate guidance to implement its ambitious growth strategy.
Development Impact: The limited development of the financial sector is one of the major weaknesses of the Russian economy. This project would help address these weaknesses in two ways. First, retail banking is very restricted in Russia; only a small percentage of the population have bank accounts, and consumer lending to individuals is minimal. RSB could have a significant impact on the development of the sector, both through its own activities and through the demonstration effect on other banks, resulting in considerable benefits for development of a real retail banking sector in Russia. Second, a significant proportion of RSB''s business will involve lending to SMEs. Whereas in most countries in the region, SMEs have been an engine of economic growth and constitute the backbone of the economy, Russia''s SMEs cannot realize their growth potential due to insufficient access to external financing and lack of financial services. Development of RSB''s SME operations will help broaden SMEs'' access to bank financing.
WBG Strategy and IFC Role: Helping the development of the local banking sector and its recovery from the financial crisis of 1998 is a central part of the World Bank Group''s strategy in Russia. Commercial sources of equity and other long-term funding for Russian banks remain very limited unless they belong to one of the big financial industrial groups. Therefore, IFC’s equity investment in RSB would help the Bank continue its dynamic growth and allow it to leverage its experience in retail lending by building a small business finance operation.
The project will also support IFC’s strategy in Russia by identifying banks which, over time, can grow into substantial commercial lending institutions, and become significant players in the financial sector and the economy in general. RSB is one such institution which requires additional capital as well as the benefit of external corporate guidance to implement its ambitious growth strategy.
Sponsor / Cost / Location
Development Impact
Related ESRS/ERS
Contacts
For Inquiries About the Project, Contact
Legal address:
ZAO Russian Standard Bank
Bldg. 6, 2/1 ul. Spartakovskaya
105066 Moscow
Mailing address:
ZAO Russian Standard Bank
Bldg. 1, 6/1/2, Kadashevskaya emb.
109017 Moscow
ZAO Russian Standard Bank
Bldg. 6, 2/1 ul. Spartakovskaya
105066 Moscow
Mailing address:
ZAO Russian Standard Bank
Bldg. 1, 6/1/2, Kadashevskaya emb.
109017 Moscow