The Bank’s Parent company – RBI – is one of the leading corporate and investment banks in Austria and in Central and Eastern Europe (“CEE”). In CEE RBI operates an extensive network of subsidiary banks, leasing companies and a range of other specialized financial service providers in 17 markets. 56,000 employees service about 15 million customers through around 3,000 business outlets in the region. RZB owns about 78.5% of RBI common stock; the balance is free-float, listed on the Vienna Stock Exchange. Founded in 1927, RZB is the central institution of the Austrian Raiffeisen Banking Group (RBG) and acts as group centre for the entire RZB Group, including RBI.

Bayer AG is Germany-based pharmaceuticals, polymers and agrochemicals conglomerate with sales of about €31 billion and EBITDA of about €6 billion in 2009. The group’s structure consists of three divisions: Bayer Healthcare, Bayer CropScience and Bayer MateriaScience. Bayer CropScience manufactures herbicides, insecticides, fungicides, seed treatment and seeds.

The total project cost is estimated at $70 million at IFC own account, to be provided as a risk sharing facility on the portfolio of up to $140 million of receivables generated by Bayer Ltd. to existing and new farmer-clients. The Bank will provide a guarantee to farmers which will allow them to buy on credit from Bayer. IFC will share with the Bank 50% of principal losses on a portfolio of guaranteed Promissory Notes and guarantees to farmer clients. IFC will benefit from a first-loss counter-guarantee by the Company.

70.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	70.0
Loan
Equity

* These investment figures are indicative

Bayer and the Bank are headquartered in the capital of Ukraine, Kyiv. Aval operates around 930 outlets located in big cities, provincial and community centers and villages across Ukraine. Bayer Ltd. covers the entire territory of Ukraine via the chain of local distributors.

IFC development impact in this investment will be measured according to the following indicators:

i) increased and improved access to financial services for agricultural SME''s and farmers;
ii) support agri-customers and one of the leading sectors of the Ukrainian economy through an innovative financial product;
iii) demonstration effect to the local market that should encourage local banks to serve this crucial yet largely underserved sector;
iv) improvement of Bayer''s and farmers'' integrated pest and disease management (IPM/IDM) approach, coordinated use of pest and environmental information along with available pest control methods, including cultural practices, biological, genetic and, as a last resort, chemical means to prevent unacceptable levels of pest damage.

Structuring and Emerging Markets Experience: IFC will leverage its agribusiness and structuring expertise and its knowledge of the local market in developing the Project.

Improved Access to Finance: The proposed investment would encourage the Bank to provide funding to agribusiness SMEs on the comfort that part of their risk exposure is covered by IFC.

Demonstration Effect: This Project would have a demonstration effect. IFC''s relationship with Bayer and the partner Bank is expected to be replicated with other clients and in other emerging markets.

Environmental and Social Sustainability: IFC will translate its commitment to carry out its investment operations in a manner that "do no harm" to people or the environment through clients'' encouragement to implement pest control activities that have minimal effects on the environment.

Technical Assistance: There is scope for potential Advisory services which would lend IFC''s experience in the crop inputs sector to Bayer''s operations in Ukraine.

This is a category B project according to IFC’s Environmental and Social Review Procedures, given the fact, that transportation and storage are carried out by Bayer’s contractors, the Project has limited environmental and social (E&S) adverse impacts that can be avoided or mitigated by adhering to national laws and regulations, generally recognized good industry practices and guidelines.

IFC’s E&S review has confirmed that the project must be managed consistent with the following IFC Performance Standards on Social and Environmental Sustainability: PS1 (Social and Environmental Assessment and Management Systems); PS2 (Labor and Working Conditions); PS3 (Pollution Prevention and Abatement) and PS4 ( Community Health, Safety and Security).

Key E&S aspects/impacts of the project include: Local QHSE Management System capacity to address potential direct and indirect E&S impacts associated with crop protection products’ transportation, storage, use and waste disposal; Compliance with national laws and regulations; the International Code of Conduct on the Distribution and Use of Pesticides, the World Health Organization (WHO) Recommended Classification of Pesticides by Hazard; the Stockholm Convention on Persistent Organic Pollutants (POPs); Human resources policy; Working conditions and terms of employment, including occupational health and safety; Awareness and training of farmers on implementation of Integrated Pest and Disease Management Plans; Waste disposal/ recycling of empty containers; Emergency preparedness and response.

The information about how these potential impacts will be addressed by the Company is summarized in the Environmental and Social Review Summary (ESRS). The Company is committed to implement all corrective actions identified in the E&S Action Plan (the ESAP) to mitigate negative E&S impacts and risks associated with its operations. Upon implementation of the ESAP, the proposed project will comply with the E&S requirements of host country laws and IFC’s Policies, Performance Standards and industry specific guidelines.