ProCredit Ukraine belongs to ProCredit Group that focuses on providing wide range of banking services to MSMEs through a network of 22 banks operating in Eastern Europe, Latin America and Africa. The Bank is well represented throughout the country via its branch network that consists of 63 branches in 27 Ukrainian cities as of end of 2007, and its branch expansion continues. The Bank employs over 1,800 employees and serves more than 44,000 borrowers in all regions of Ukraine.

ProCredit Holding AG, a parent company for ProCredit banks, is a major shareholder of the Bank with a 60% share in the Bank’s capital. ProCredit Holding’s shareholders are a mix of private and public investors. The European Bank for Reconstruction and Development (EBRD), a developmental institution operating in Central and Eastern Europe and the Commonwealth of Independent States (CIS), and Western NIS Enterprise Fund (WNISEF), a private equity fund investing in small and medium-sized enterprises in Ukraine and Moldova, own 20% of the Bank’s capital each.

The total project cost would be up to $20 million and would consist of a loan for IFC’s own account of up to $20 million.

20.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	20.0
Equity

* These investment figures are indicative

The Bank is headquartered in Kiev and has 63 branches across Ukraine.

The potential developmental and institutional impact of the project is high. The project is expected to generate an important impact in Ukraine’s EE sector development, EE finance market development and have significant environmental and social impact.

Ukraine’s economy is vulnerable to potential increases in gas import prices and possible supply shocks. Improving energy efficiency of the economy is important to ensure further sustainable growth and therefore has become one of high priorities for Ukrainian government. This project will have a positive impact on the development of Ukraine’s EE sector via supporting energy efficiency improvements in the MSME sector and household sector.

Current lending environment in Ukraine provides limited opportunities for financing energy efficiency improvements. This project will help IFC support a significant number of EE projects in the housing sector and MSME sector which might otherwise be illegible for traditional bank financing. As one of the first EE dedicated credit lines for MSMEs and households, the project will introduce a new loan product to the market and will support EE finance sector development in the country.

Via financing EE improvements, this project would result in energy savings for the end-users, will lower their energy costs and will decrease negative impact on the environment. Through energy efficiency housing renovation loans, the project is also expected to contribute to the increase of residual income of the population through reduction of utility payments and will improve standards of living in low-income households. In addition, the project will raise awareness of the general population on investing into EE improvements.

IFC has over ten years of experience in EE financing, particularly in Central and Eastern Europe, and is well positioned to leverage its experience into other countries. By providing this loan accompanied by tailored Advisory Services, IFC would play an active role in:
- building the capacity of the Bank in providing long term funding to MSME and retail clients aimed at financing EE improvements;
- promoting the development of innovative EE products to the market and supporting the development of EE finance sector in Ukraine; and
- raising market awareness in the area of EE in Ukraine.

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.

The Applicable Performance Requirements based on the activities proposed to be supported with IFC financing are:

- The IFC FI Exclusion List; and
- The applicable National Social and Environmental Laws and regulations.

The Bank uses the template Social & Environmental Management System (SEMS) for all ProCredit banks. For this investment, ProCredit Ukraine will provide an update on the SEMS and demonstrate that it is adequate to address the social and environmental risks associated with the anticipated investments. If required, IFC will suggest Supplemental Actions to address any gaps in the SEMS.

Based on the review, the Bank will be required to:

- Upgrade if necessary its existing SEMS, prior to disbursement to the satisfaction of IFC
- Identify responsible, qualified persons to manage and implement the SEMS
- Commit to implement the SEMS, to ensure that its investments/activities supported by IFC financing are in compliance with the
- Applicable Performance Requirements
- Submit a periodic report to IFC as per a format to be provided by IFC