Societe Generale Group is a leading French-based banking group with operations throughout the world. The Group is active in emerging markets, with a €14 billion loan portfolio in emerging markets (up from €11.7 billion in 2001). Societe Generale had a large banking presence in Russia prior to the Russian revolution, with branches from St. Petersburg to Vladivostok in the Russian Far East. The Banque Russo-Asiatique, as the Russian bank was known, was one of the country’s largest banks at the time with a 175-branch nationwide network. This project represents a return of the Bank to retail markets where it has not been present in over eighty years. Two of the Group’s most significant foreign banking operations are in Eastern Europe (Romanian Development Bank and Czech Komercni Banka, both of which were privatized state banks), where the Group’s expansion plan entails growing its retail operation. The Group is currently present in 28 countries of Eastern Europe, the Mediterranean basin, Asia, Western Africa and Latin America (Argentina), with 4.8 million customers, 27,000 employees and 1,232 branches in emerging markets, but at present has a limited retail presence in the former Soviet Union.

The proposed project consists of a senior loan of up to $75.0 million to BSGV and a loan of up to $20.0 million to BSGV-Leasing for IFC’s own account. The proceeds of IFC’s loan will be used to support BSGV’s mortgage lending operations, and BSGV-Leasing to provide lease financing to Russian corporate clients.

75.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	75.0
Equity

* These investment figures are indicative

BSGV is headquartered in Moscow, where it has concentrated on corporate lending since 1993. BSGV has developed an ambitious expansion plan to open a number of retail outlets in Moscow, St. Petersburg, and the Russian regions. BSGV-Leasing will work primarily in the areas where the Bank is active, but will also work in a somewhat broader geographic area.

The project’s primary development impacts are the increased availability of financial products, particularly mortgages and financial leasing, for Russian consumers and enterprises in several Russian regions provided by a leading global banking player. BSGV’s entry into the retail banking market on a large scale is expected to further enhance the credibility of and confidence in the local financial markets and the Russian economy in the aftermath of the 1998 financial crisis, which is still reflected in the low penetration of banking services. IFC’s strategy for the Russian financial sector has been to support the development of new financial products and services, to increase the depth of services provided by supporting the introduction of high-quality banking services in the regions, and to support privatization. Through this project, IFC helps bring additional competition and best practice to the market as well as better access to high standard banking services and products for Russian companies and individuals. These benefits will ripple through to the entire Russian banking sector. In addition, the growth of BSGV’s business in Russia will send a positive signal to other major financial institutions which are considering entering the Russian market.

This is a Financial Intermediary (FI) Type 1 project according to IFC''s environmental and social review procedure. BSGV must establish an environmental management system designed to ensure that loans comply with Russian environmental, health and safety standards. BSGV must participate in IFC-approved environmental training and provide IFC with annual environmental reports.
Location of environmental documents in locally affected community