The project sponsor is Poteza Adriatic Fund B.V. (Poteza, or the Fund), an IFC existing portfolio private equity fund formed by Poteza Nalozbe d.o.o from Slovenia. The Fund makes equity and equity-related investments in companies based in Southeastern Europe through majority or significant minority stakes. Its primary target countries for investment are Bosnia and Herzegovina, Croatia, Serbia, and Slovenia. In June 2005, Poteza and a co-investor, Prva Pokojninska Druzba d.d., a pension insurance company based in Slovenia, acquired 50% + 1 share ownership of the Bank. Poteza and its co-investor own 44.1% and 5.9% respectively of the Bank’s share ownership. Other shareholders include local individuals and corporations such as Slobodan Radanovic (5.7%), Invest Nova d.o.o. (3.7%), and Goran Avlijas (3.4%).

The proposed IFC financing package is for a total amount of EUR 15 million.

18.15 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	12.30
Equity	5.86

* These investment figures are indicative

Nova Banka is a licensed commercial bank headquartered in Bijeljina, Bosnia and Herzegovina, with 11 branches and 58 outlets mainly in RS.

This project is expected to have a high impact contribution to economic development, financial sector development and poverty reduction in the influence area of the project in BiH. First, the project is expected to increase confidence in the financial sector in BiH, particularly the RS region which suffers shallower financial deepening. IFC’s investment will help strategic investors consolidate and modernize the local banks in BiH, and eventually raise confidence in the banking sector, stimulate Bosnian banks to upgrade their operations/services, expand their private sector lending, and improve corporate governance practices. Second, the proposed IFC financing would help the country develop its nascent mortgage market by improving availability and affordability of housing finance products. There is a high demand for housing loans because many Bosnians had to relocate their places during and after the civil war, and they still do not have their own living facilities. Third, the proposed financing will improve and increase the access to term finance for SMEs, which accounts for 60% of the country’s industrial output. A further and long-term benefit could be reduced costs for SMEs as competition among banks intensifies and productivity improvements for SMEs that use the financing to upgrade their productive capacity. Finally, expansion of financing available for a large under-served group of SMEs through Nova Banka will directly contribute to employment generation and raise household income levels. In this project, IFC will: - help one of the most active lenders to the private sector in BiH to expand its financings of SMEs and households; - promote the economic unification of the BiH banking sector through assisting a RS-based bank in further expanding its lending operations to the other part of the country, the Federation of BiH; - improve access to long-term finance for SMEs and homebuyers in BiH; and - help mobilize funds for a technical capacity building in specific areas that would enable better service delivery to corporate and individual customers.

This is an environmental and social FI type 1 project. Nova Banka will be required to establish an environmental management system which is acceptable to IFC in order to ensure that its operations in lending to clients are in compliance with host country environmental and social requirements.
Location of environmental documents in locally affected community