As of March 31, 2008 the shareholding structure was the following: Mr. Igor Vladimirovich Kim owned 79.07% of total shares, Prosperity Capital Management (PCM) owned 19.90% of total shares, and minority investors 1.03% of total shares. PCM plans to increase its stake to 25% during the second quarter 2008.

The proposed project consists of an equity investment of up to $22 million in RPSB, to purchase 20% of the voting shares of the Bank.

22.0 million (USD)

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

* These investment figures are indicative

RPSB has Head Office and two outlets in Rostov-on-Don, one outlet in Belaya Kalitva, and one outlet in Salsk.

The project is expected to have a strong development impact. As the Bank’s shareholder, IFC will work together with the Bank at expansion of the banking penetration in the currently severely under-banked Southern Federal District of Russia, and also at further strengthening and consolidation of the banking system in the region.

The project will also strengthen the Bank’s capacity in social and environmental management. The Bank will need to comply with IFC’s environmental and social management standards and establish the Social and Environmental Management System (SEMS). This will improve the Bank’s standards in this area and create a demonstration effect for other banks active in the Southern Federal District.

Finally, the project will facilitate capacity and institution building of the Bank based on best practices of corporate governance and risk management. IFC will appoint a Director on the Bank’s Board of Directors, and participate in structuring the Bank’s business strategy and growth.

IFC had a number of important roles in this project:

- Strengthening the banking sector in Southern Russia by supporting the expansion of RPSB both through organic growth and through mergers and acquisitions process;
- Implementing good governance through nominating a Director to the Bank’s Board;
- Improving RPSB’s profile and credit ratings and facilitating the Bank’s access to international debt market;
- Strengthening long-term partnership that could be the basis for future projects with the Bank; and
- Contributing to a consolidation of Russia’s banking sector.

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 activities proposed to be supported with IFC financing 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.

Although part of an existing client group, RostPromStroyBank itself is a new IFC client. IFC will review the Social & Environmental Management System (SEMS) in the context of this investment and suggest supplemental actions to address any gaps in the SEMS, if required.

Based on the Applicable Performance Requirements and SEMS review, the Bank will be required to:

- Develop an, or upgrade, if necessary, any 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.