Societe Generale Group (SocGen) is a leading French-based banking group with important market shares in core products and operations throughout the world. SocGen is a joint-stock company listed on the Paris stock exchange. Its stock is widely held, and there is no dominant shareholder. The Group is active in emerging markets, with a Euro 14 billion loan portfolio in emerging markets. On January 6, 2005, SocGen’s market capitalization was at EUR 33.9 billion. The Group’s shareholders’ equity stood at EUR 18.6 billion as of December 31, 2004. The Group employs 92,000 employees worldwide.

The proposed project consists primarily of senior loans of up to EUR 185 million, or its equivalent in other currencies, for IFC’s own account to current and future affiliates of Societe Generale Group (SocGen affiliates) in Russia and Ukraine. The proceeds of IFC’s loans will be used to support the growth of SocGen affiliates’ consumer finance and operational car leasing activities and related investment projects.

265.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	265.0
Equity

* These investment figures are indicative

- Societe Generale has formed a joint venture with Baring Vostok Capital Partners and is setting up a banking subsidiary specializing in consumer finance in Russia. Through the joint venture Societe Generale is present in 15 regions of Russia, and 90% of the loan book, financed exclusively from equity, is outside of Moscow. - The SocGen group (using the name “ALD” in Russia) is also a leader in operating car leasing in Western Europe, a service it intends to provide through its affiliates in the region. - Franfinance Ukraine is a start-up project to establish and provide consumer finance services throughout Ukraine using SocGen’s proven approach in other European markets. - Other affiliates of SocGen involved in providing financial services in Russia and Ukraine may participate subject to certain restrictions.

Through this investment, IFC would strongly support SocGen’s efforts in emerging markets financial services. By providing loans to the Group’s emerging markets financial services affiliates, IFC would help these financial institutions to expand their funding base, extend their maturity profile, and meet the necessary financing needs of Russian and Ukrainian individuals. The proposed project would also further cement IFC’s strong partnership with Societe Generale globally and demonstrate an innovative approach to support emerging market finance worldwide. Specifically, IFC financing will: - For consumers: provide Russian and Ukrainian individuals with better access to high standard banking services and products, spur the growth of the consumer finance sector in Russia and Ukraine, and increase the standards of living of the local population. The effect of a reputable global bank devoting substantial resources to these markets is expected to increase confidence in the financial sector, - For the financial sector: strengthen financial institutions by means of competition in the retail market, which has ample room for growth, and increase the sophistication of Russian and Ukrainian retail, consumer finance and operating leasing markets through SocGen affiliates, which are using best market practices in areas such as staff training, marketing, credit policies and procedures, risk management techniques, product design and customer service, - For local businesses: increase the access to finance of Russian and Ukrainian companies through operational car leasing, as well as improving demand for retail products by providing finance to the broader population, who typically lack access to credit.

This is a Financial Intermediary (FI) Type 1/Type 2 project according to IFC''s Environmental and Social Review Procedure. Each affiliate of SocGen under this project will be required to implement and maintain an environmental management system to ensure that relevant operations comply with host country environmental and social standards. If IFC''s appraisal of a particular transaction under this project indicates that it qualifies as FI Type 2, then the affiliate will also be required to comply with applicable IFC environmental and social policies and applicable IFC/World Bank environmental, health and safety guidelines, and any investment by the affiliate in a Category A project will require the prior approval of IFC. Every affiliate under this project will be required to appoint staff responsible for the environment who would participate in an environmental workshop organized or approved by IFC, and every affiliate will be required to submit to IFC an environmental management plan and annual environmental performance reports.
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