The Bank is owned by several Russian shareholders led by Mr. Igor Kim, EBRD, DEG, and international portfolio investors. Mr. Kim, the Bank’s major shareholder, together with his close business partners Mr. Bekarev and Mr. Taranov, jointly own 52.1% of the voting shares. EBRD, DEG and Clariden Leu jointly hold over 28% of the voting shares.

The proposed project is an investment package consisting of an A Loan of up to $50 million and with a tenor of up to 4 years for IFC’s account (A Loan) and a B Loan of up to $100 million and with a tenor of up to 2 years (B Loan). The IFC A Loan will be used:

- for trade finance;
- for project finance, working capital and investment loans to small and medium sized enterprises; and
- to make loans to enterprises to finance investments in goods and services aimed at improving the efficiency of energy use in buildings, industrial processes and other energy end-use applications.

The B Loan will be utilized mostly for shorter-term trade finance loans.

50.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
Equity

* These investment figures are indicative

Headquartered in Novosibirsk, as of November 1, 2007 the Bank has 20 regional branches, 244 outlets, 3 foreign representative offices and 8,940 employees in approximately 120 cities and towns of the Ural and Siberian Federal Districts of Russia. Proceeds from both A and B loans will be on-lent throughout the entire Bank’s branch network.

The extensive regional branch network, and presence of SME and mortgage finance among the Bank’s priority business lines make the Bank an important strategic partner of IFC. By providing support to URSA Bank, IFC continues supporting its strategic development objectives in Russia – in particular, increasing access to finance for SMEs, and bringing innovative and sustainable banking products and high-quality banking services into the regions of Russia.

The project will help the Bank to introduce new products and services with high development impact such as energy efficiency (EE) finance. The Bank’s extensive branch network in Siberia and the Urals and its SME client base make it a very good candidate for energy efficiency lending. The Financial Markets EE strategy in Central and Eastern Europe includes leveraging IFC’s existing financial institutions client base and integrating EE into SME, housing and consumer finance offerings; developing innovative financial structures and new products; and building a robust advisory services program to support capacity building at client level. By working closely with URSA Bank in this project, IFC would play a critical catalytic role in mobilizing the EE-focused funding for the SME sector in Russian regions via a demonstration effect, which is in line with its Financial Markets and EE strategies. Encouraging URSA Bank to develop EE-focused lending business will therefore further enhance the development impact of the project.

In addition to provision of financing IFC plans, as a related, but separate project, to provide advisory services to URSA Bank and its clients on technical, financial and legal aspects of EE finance, as well as to provide EE-relevant training to URSA Bank’s loan officers, assistance in EE product development, and assistance in EE projects pipeline development.

Support provided to URSA Bank, the largest regional Russian bank operating in the Urals, Siberia and the Russian Far Eas, will have a significant positive impact on the Russian regional banking system in general.

IFC plays multiple roles in this project:

- it will provide the much-needed funding to the Bank at the time when the funds are scarce on the market due to current liquidity constraints; and
- it will contribute to the competitiveness of Russian SMEs through the EE component of the project, thereby enabling the SME sector, and specifically the regional SME sector, to become a more meaningful driver of Russia’s GDP growth, while lowering energy consumption and related CO2 emissions.

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

During appraisal, IFC will analyze the FI portfolio, for types of transactions, size, tenor and industry sectors and determine the Applicable Performance Requirements, if any, that would include a combination of:

- The IFC FI Exclusion List and/or
- The applicable National Social and Environmental Laws and regulations and/or
- The IFC Performance Standards.

IFC will also review, if required, the capacity of the FI to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in the SEMS.

Based on the review, the project will be required to:
- Develop an, or upgrade, if necessary, any existing Social & Environmental Management System (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 are in compliance with the Applicable Performance Requirements;
- Submit a periodic report to IFC as per a format to be provided by IFC.