ZAO Raiffeisenbank is a subsidiary of Raiffeisen Bank International AG (RBI). The Bank has been operating in Russia since 1996 and offers a full range of services to retail and corporate customers. RBRU ranks 10th among the Russian banks in terms of assets, 5th in terms of private deposits and 11th with regard to lending to non-banking sector as of 31/12/2011 according to ranking information published by Interfax CEA on the basis of annual 2011 results according to Russian accounting standards.

RBI is a leading universal bank in Central and Eastern Europe (CEE) and one of the foremost providers of corporate and investment banking services in Austria. RBI originated from the merger of the spun-off principal business areas of Raiffeisen Zentralbank Österreich AG (RZB) with Raiffeisen International Bank-Holding AG. The transaction was legally completed in October 2010. RBI is a fully-consolidated subsidiary of RZB, which owns around 78.5 per cent of the bank’s common stock. The remainder is in free float, with the shares listed on the Vienna Stock Exchange.

The targeted issuance amount in RBRU’s inaugural DPR securitization is up to US$250 million of which IFC would consider investing up to US$75 million from its own account.

75.0 million (USD)

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

* These investment figures are indicative

RBRU is headquartered in Moscow. It has a wide geographical coverage throughout Russia. As of end-2011, RBRU was present in over 40 regions in Russia, and had 190 offices as of 30/09/2011. The proceeds from IFC’s investment can be made all across the country.

The proposed Project is expected to have a number of the development impacts:
1. Capital market development: As the first DPR securitization out of Russia since the crisis, this would provide an important signaling effect to the market and could set the stage for subsequent Russian DPRs.
2. The deal would create a long-term funding source for the Bank.
3. The Project is expected to positively impact private sector development by increasing access to finance for SMEs. Long-term financing is crucial for the sustainable development of the private sector across the country that would result in improved economic development and improved living conditions.
4. The Project would contribute to the objective of commercial long-term lending without sovereign guarantees to well-performing subnational entities to support their investment in the essential economic and social infrastructure.
5. Demonstration effect: A succesful closing with the participation of other IFI''s could be used as a model for replication with other Western European banks with emerging market subsidiaries.

1. IFC will play the role of a lead investor, which will significantly contribute to the deal reaching the issuance amount of US$250 million, and provide a signaling effect to other potential private investors.
2. Use of Proceeds requirement: Through IFC''s use of proceeds requirement under the DPR investment, IFC will direct up to US$75 million of financing towards onlending to subnational entities to support their investment in the essential economic and social infrastructure; and SMEs, which would not necessarily occur to that degree without IFC.

The proposed project has been classified category FI according to IFC’s Environmental and Social Review Procedure and involves purchase of a DPR securitization bond. Under the DPR investment, IFC will direct up to US$75 million of financing towards investment in economic and social infrastructure projects, such as water, heating, and municipal finance and provide financing for SME lending. CES appraisal focused on e&s risks of the infrastructure projects proposed for financing and on the Bank’s existing capacity to manage such risks. The applicable performance requirements for the Bank’s lending activities include the IFC Exclusion List, Russian social and environmental laws and regulations, and the IFC Performance Standards. The Bank will be required to make revisions to its existing Social and Environmental Management System (SEMS), appoint staff responsible for SEMS implementation, and submit an Annual Social and Environmental Performance report to IFC. 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.