IMB is 100% owned by a holding company IMBG whose primary asset is the Bank. In addition to IMB, the holding company owns 100% of Family Credit, a consumer finance company. Family Credit was acquired in 2006 and it acts as an intermediary for other non-mortgage consumer loans booked on the Bank’s balance sheet. IMBG’s major shareholders include Emerging Europe Growth Fund (EEGF) managed by Horizon Capital (36% stake), and East Capital Explorer Financial Institutions Fund (15% stake). In June 2007, through secondary offering, IMBG successfully raised $100 million of fresh equity from a group of institutional investors, including Warburg Pincus, the major US private equity fund, who invested in more than 20% stake in IMBG. Another 15% of IMBG’s shares are listed on the Viennese stock exchange through a warrant program with Bank Austria Creditanstalt. The warrants are owned by a diverse group of institutional and individual investors.

The IFC’s proposed investment will consist of: - a minority equity investment in IMBG to strengthen IMB's capital base and enable it to better compete in the market; - a secured warehouse line credit (the Warehouse Line or the Facility) to IMB to support its mortgage lending operations and to support IMB’s planned residential mortgage-backed securitization.

85.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	75.0
Equity	10.0

* These investment figures are indicative

IMB Group is presently headquartered in Kyiv and operates mortgage distribution centers in 6 other major Ukrainian cities (Dnipropetrovsk, Donetsk, Odessa, Kharkiv, Lviv, and Vinnitsia), while its POS loan arm, Family Credit, currently has about 400 POS in all Ukrainian regions.

The Ukrainian financial market is underdeveloped and individuals lack access to mortgage loans, in particular access to affordable long-term loans. By providing long term funding, the proposed project will enable the Bank to grow its origination volume, which, in turn, will increase market competition and lower the cost of mortgage loans, making the purchase of homes more affordable to a larger number of consumers. Moreover, the project will enable IMB to continue to extend mortgage financing to previously underserved groups. By providing increased sources of financing to the domestic population, the project will help to address the country’s housing deficit, and enable the purchase of homes by a large section of the low and middle-income population segment. The project’s development impact is noteworthy as housing finance contributes to social stability by enabling households in these income segments to purchase an asset that will represent their largest single investment.

- Impact on the primary mortgage market: The loan will support IMB in its efforts to issue a mortgage backed security which will deepen access to alternative financing for the primary mortgage market. There will be a more robust primary market practice and a healthy credit evolution resulting in lower and sustainable NPLs as origination criteria is important to have access to finance in the secondary markets. - IFC’s global expertise: IFC’s value addition is significant when considering its experience in projects in comparable economies which included setting up and developing business models to prepare banks/FIs for securitization in order to tap suitable long-term funding; and global knowledge of key products and success criteria’s in the mortgage market. - Impact on other potential transactions: IFC's involvement will help introduce standardized documentation and refined and transparent credit processes and thus will form an excellent platform to set the benchmark for increasingly cost efficient market. - Impact on the mortgage and capital markets: The introduction of improved origination criteria will help improve the credit processes and over time lead to lower and sustainable NPL’s.

This project is engaged in the business of mortgage and consumer finance, and has been classified as a Category C project according to IFC’s Environmental and Social Review Procedure. The project is required to inform IFC in the event of any change in the nature or scope of its contemplated business or operations.