The key shareholders of the Bank include Mr. Igor Kim, Mr. Sergey Vlasov, Mr. Andrey Bekarev, Mr. Alexander Taranov and two private equity funds owned by Renaissance Finance. The share of IFC in the Bank as of November 2010 constitutes 2.5%.

The proposed IFC investment is a $75 million convertible loan for IFC’s own account.

75.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	75.0
Equity	0.0

* These investment figures are indicative

Orient Express is headquartered in Khabarovsk, Russian Far East and has extensive branch network throughout the Russian Federation, but with highest concentration in the Far East and Siberia regions.

1) Through this project, IFC will facilitate the consolidation of the Russian banking sector: Orient Express has already merged with four smaller banks in 2009 and 2010, and has both appetite and capacity to continue acquisitions of small and medium banks in the next two - three years. 2) In cooperation with Orient Express Bank, IFC can further contribute to climate change mitigation and development of the energy efficiency market through enhancement of energy efficiency component in retail lending. 3) Through this project, IFC can facilitate further increase of access to finance for SMEs across sectors: Orient Express is currently operating as a primarily retail bank with a small share of micro and SME lending, but has good platform and systems in place to develop micro and small enterprise lending on a much broader scale. 4) Through this project, IFC will strengthen its business partnership with a systemically important bank operating in less-developed regions where significant developmental challenges remain: Orient Express operates in a number of frontier regions of Russia, where access to finance is especially important. Going forward, as Orient Express acquires additional banks, its distribution network will further expand and its ability to reach more clients in frontier regions will increase.

IFC's additionality in the proposed Project is: (i) the credibility and stamp of approval that will help the Bank in advance of its planned IPO; (ii) the contribution that IFC brings to good corporate governance and transparency that will enhance shareholder value; (iii) increased access to syndicated debt markets; (iv) technical assistance in developing an energy efficiency product line for retail and SME clients; and (v) formalization and expansion of its embryonic microfinance and SME product lines.

The proposed investment has been classified as Category FI. Orient Express Bank will be required to ensure compliance of the activities financed with the IFC Exclusion List, Russian environmental and social laws and regulations, and the IFC Performance Standards, if applicable. CES appraisal will focus on the client’s portfolio risk and the Bank’s existing capacity to manage environmental and social risks. In addition, due diligence will be carried out on the Bank’s HR policies and practices to determine compliance with IFC''s Performance Standard 2: Labor and Working Conditions. If needed, CES will provide recommendations to address any gaps. Final applicable requirements will be determined once IFC reviews the client’s portfolio, labor standards, and existing E&S capacity. The client will be required to develop a Social and Environmental Management System (SEMS), nominate staff responsible for SEMS implementation, and submit Annual Environmental Performance Reports (AEPRs) to IFC.