The project’s sponsor is Hamkorbank, one of the largest privately owned banks in Uzbekistan. Originally formed as a regional bank in the Fergana Valley, south east of Tashkent, it has been transformed into a nationwide financial institution offering not only SME loans but also micro loans, consumer loans and leasing products. Its shares are traded on the Uzbek stock exchange. The Bank’s shareholding structure is thinly dispersed among over 4,900 shareholders, almost 74% of which are individuals. Mr. Ibragimov, Chairman of the Board of Directors, together with family members, controls about 41% of the Bank's voting stock.

The project is to provide up to US$5 million financing package, which may include equity/quasi-equity and loan financing.

5.20 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	2.0
Equity	3.20

* These investment figures are indicative

The Bank’s head office is located in the town of Andijan in Fergana Valley, South-Eastern part of Uzbekistan. Hamkorbank has 116 branches and outlets covering 10 out of Uzbekistan’s 14 administrative districts.

IFC’s investment in Hamkorbank will have a strong developmental impact as it would support the strategy of a medium-sized independent private Uzbek bank. By supplying funding to MSEs (“micro and small enterprises”), the project would support economic development of the region, increase employment in the country and contribute to development of best practices. In addition the Project is expected to create a demonstration effect for other private banks in Uzbekistan, encouraging them to improve corporate governance and operational standards. The Project would also foster competition in the Uzbek banking sector by providing micro and small entrepreneurs across the country greater access to banking products.

IFC’s involvement would improve the Bank’s funding profile and strengthen its capital base, thereby enabling it to further develop and expand its loan products, particularly in the area of MSEs lending. IFC would provide longer term funding to the Bank than is available from the market. Furthermore, IFC’s involvement would support important corporate initiatives (e.g., in the areas of governance and risk management) which would result in strengthened operational profile and thereby create a demonstration effect for other Uzbek banks. By forming a strong long-term partnership, IFC established the basis for implementing a number of IFC initiatives in Uzbekistan including microfinance, housing, and agriculture finance. IFC’s role in catalyzing the growth of the private sector in Uzbekistan is considered important and consistent as IFC has contributed much through its Business Enabling Environment advisory program in Uzbekistan since 2001.

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 Bank''s portfolio, and 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
- The applicable National Social and Environmental Laws and regulations and/or
- The IFC Performance Standards

While the Bank is an existing IFC client as this project follows IFC''s revised Environmental and Social Review Procedure, IFC will review the capacity of the Bank to manage social and environmental risks and maintain a Social & Environmental Management System (“SEMS”). If required, IFC will suggest supplemental actions to address any gaps in the SEMS. The Bank will be required to:

- Provide IFC with an updated S&E performance report prior to commitment
- 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 Requirement
- Commit to apply the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions
- Continue to submit a periodic report to IFC as per a format to be provided by IFC