24003 - Absolut Bank

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Summary of Proposed Investment

Project Number

24003

Company Name

ABSOLYUT BANK, PAO

Date SPI Disclosed

Apr 13, 2005

Country

Russian Federation

Industry

Financial Markets

Projected Board Date

May 30, 2005

Status

Completed

Sector

Commercial Banking - General

Department

Global Industry, Financial Markets

Environmental Category

Previous Events

Approved : Jul 26, 2005
Signed : Jul 22, 2005
Invested : Dec 2, 2005

Project Description

The project company is Absolut Bank (the Bank or the company), a private medium sized bank serving primarily the Moscow region. It is a well-managed and profitable institution experiencing strong asset growth, with good market position and high efficiency of operations. The Bank’s three core business areas include corporate finance, retail banking, and financial institutions. The project consists of a senior loan to be used by the Bank for the expansion of its residential mortgage lending program and, potentially, an equity or quasi-equity investment to enable the Bank to strengthen its capital base and expand its operations.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	15.0
Equity	10.0

Development Impact

The project is expected to have a significant development impact. The housing finance business in Russia is at a very early stage of development. There is significant unmet demand for housing and need for financing particularly for families upgrading their living conditions. By providing funding for residential mortgages combined potentially with technical assistance to the Bank, the project will broaden access to the product in the market outside of the group of international players in Moscow. The proposed technical assistance is expected to improve underwriting standards at the Bank and bring them in line with best practice. IFC’s role is to: - provide long-term funding for mortgages to the Bank and to support the growth of this business through technical assistance; and - strengthen the Bank’s capital and enabling it to grow further.

For the SME-oriented part of the proposed investment, the environmental category is FI type 2. The Bank will be required to establish an environmental management system to ensure that lending under this project complies with host country environmental and social requirements and is consistent with IFC’s exclusion list and any applicable WBG environmental health and safety guidelines and safeguard principles. The Bank will designate staff who will have responsibility for environmental affairs and will participate in IFC’s environmental training. Absolut Bank will also submit annual environmental performance reports to IFC.
Location of environmental documents in locally affected community
n/a

Contacts

For Inquiries About the Project, Contact

Alexander Von Gleich, Investment Officer Central and Eastern Europe Department International Finance Corporation avgleich@ifc.org

This Summary of Project Information (SPI) is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC's activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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