Societe Generale (SocGen) owns 60% of Bank Republic since September 2006. Societe Generale is one of the largest banking groups in Europe with shareholders’ equity of over 27 billion Euro as of end 2007 and AA- credit rating from S&P and Fitch. SocGen is IFC’s global partner in eight different financial institutions, in Russia, Ukraine, Jordan and Georgia, including Bank Republic. European Bank for Reconstruction and Development (EBRD) holds 10% of the Bank, while the remaining 30% are controlled by two local individual shareholders.

The proposed IFC investment consists of a financing package of $22 million that includes a subordinated loan of $7 million and a straight senior loan of $15 million for IFC’s own account.

22.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	22.0
Equity

* These investment figures are indicative

Bank Republic is headquartered in Tbilisi and has branches and service centers in 11 other Georgian towns and cities: Batumi, Kutaisi, Samtredia, Zugdidi, Poti, Rustavi, Telavi, Gori, Marneuli, Ozurgeti and Kheiti. The Bank is planning to open 12-15 outlets in 2008 and in coming years, the number of branches and service centers will reach 60-80 throughout the Georgia.

The expected development impact of this project is high, because of achieving the following objectives in an IDA country:

- Building on IFC’s successful history, this project would contribute further to the development of the mortgage lending in Georgia, an IDA country, through providing much needed long term funding to a local bank. This investment is to be the first IFC loan with 10 year tenor provided to a Georgian bank.
- Increasing an access to long-term mortgages for local borrowers that otherwise are not able to afford better housing. Bank Republic plays an important role in terms of strengthening public confidence in the banking sector in general, providing financial intermediation in the Georgian economy and playing a role model for other banking institutions in the market.
- Supporting efforts of one of the leading Georgian banks to diversify and to increase the maturity of its liabilities and therefore, better manage its asset and liability position. Longer tenor financing from IFC would support Bank Republic and, therefore, would affect the fragile banking system of Georgia in times of tight liquidity and absence of long term funds.

IFC’s main role in the project is to:

- support the banking sector in an IDA country in difficult times of liquidity crisis by providing much needed financial support;
- further contribute to the development of the mortgage market in Georgia through providing long term funds to local banks; and
- provide long tenor funding to Bank Republic for further on-lending to the Georgian retail customers.

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

As an existing IFC client, Bank Republic has nominated an SEMS Officer and established a Social & Environmental Management System (SEMS) to screen investments against the IFC FI Exclusion List and applicable Georgian social and environmental laws.

During appraisal, IFC will analyze the activities proposed to be supported and determine additional 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.

The Bank will be required to:

- Maintain or upgrade if necessary its SEMS;
- Continue to ensure that responsible, qualified persons are appointed 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;
- Continue to submit a periodic report to IFC as per a format to be provided by IFC.