The Bank’s shares are listed on the Belgrade Stock Exchange. The Government of Serbia is the largest shareholder with about 43% direct ownership in KBB. European Bank of Reconstruction and Development is the second largest shareholder of the Bank with a minority 25% stake. About 32% of the Bank’s shares is owned by small shareholders individually holding less than 5% of the Bank.

The proposed investment is expected to be made by the IFC Recapitalization (Equity) Fund, L.P., sponsored by IFC (the “Fund”). In the event the proposed investment (or a portion thereof) is not made by the Fund, IFC may make the investment (or a portion thereof) directly. The Project is part of an investment package currently being mobilized by several European development banks for the Bank. The total cost of the Project is about EUR220 million. The proposed investment is in Tier 1 Capital instrument. The IFC Bank Recapitalization Fund will invest approx EUR40 million.

KBB is headquartered in Belgrade and operates through its network of 295 branches and outlets in Serbia and two subsidiary banks in Bosnia & Herzegovina and Montenegro.

The Project is expected to have a high development impact. It will: - help the Bank to maintain its credibility in the market and expand its financial services and products to Serbian enterprises and individual consumers, supporting economic activity and job protection in the country; - strengthen the capital base and adequacy of the Bank and demonstrate the ability of a Serbian locally-owned bank to attract investments from international institutional investors in difficult financing times; - bolster a recently built depositors’ confidence in the banking sector of Serbia needed to go over a difficult crisis period; - advance capacity and institution building of the Bank through the BRF’s/IFC’s-nominee possible involvement in the Bank’s Board of Directors; and - facilitate the eventual sale of the Bank to a strategic investor.

The Project will have a strong development contribution. It will: - signal IFC’s confidence in the banking sector of Serbia in a joint action with other European development banks in times of global economic slowdown to stabilize the banking sector of the country; - secure capital funding to a systemically important bank in Serbia amid lacking alternative financing during the ongoing financial turmoil; and - prop up the Bank’s shareholders’ eventual goal to privatize the Bank.

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

IFC will analyze the Bank''s portfolio, for types of transactions, size, tenor, and industry sectors and determine the Applicable Performance Requirements, if any, that would include a combination of:
(i) The IFC Exclusion List(s); (ii) The applicable National Social and Environmental Laws and regulations; (iii) The IFC Performance Standards. IFC will also appraise the Bank''s labor practices according to the IFC’s Performance Standards 2: Labor and Working Conditions.

Based on the review, the Bank will be required to: (i) Develop SEMS, prior to disbursement to the satisfaction of IFC; (ii) Assign responsible, qualified persons to manage and implement the SEMS; (iii) Commit to implement the SEMS, to ensure that its investments/activities are in compliance with the Applicable Performance Requirements; (iv) Demonstrate commitment to applying the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions; (v) Submit a periodic report to IFC as per a format to be provided by IFC.