Washington D.C./ St.Petersburg, July 1, 2002
—The International Finance Corporation, the private sector development arm of the World Bank Group, will provide a five-year US$10 million credit line to Industry & Construction Bank (ICB), a commercial bank operating in St.Petersburg. IFC’s financing will support the company’s operations providing medium-term and working capital financing to small and medium size enterprises (SMEs).
ICB, established in 1990, focuses its business activities in the North-West region of Russia, and is expanding its branch network into other regions of the country. As of December 31, 2001, the bank’s total assets amounted to an equivalent of $996 million and an equity of an equivalent of $122 million.
Edward Nassim, Moscow-based IFC’s Director for Central and Eastern Europe, noted that IFC’s investment will allow ICB to increase its lending to mid-sized corporates and SME’s, two groups currently underserved by local financial institutions. “The support to mid-sized enterprises and SME’s will be critical to achieve sustained economic growth and to generate employment in Russia in the next few years,” Mr. Nassim said.
Michael Oseevsky, First Deputy Chairman of the Management Board of ICB, said: “The signing of this financing was preceded by months of close cooperation and due diligence by IFC. The credit line provided by IFC will help build more confidence in the Russian banking sector among international financial institutions. IFC’s credit line will be used to finance companies in the real sector in different regions of Russia. ICB’s current clients in Kaliningrad, Krasnodar, Moscow and other regions, engaged in the manufacturing of furniture, meat processing, publishing, among others, will benefit from the credit line.”
IFC’s investment activity in Russia spans across a wide range of sectors, including mining, food processing, pulp and paper, manufacturing, oil and gas, power, telecommunications, retail trade, health care, banking, leasing and housing finance.
The Corporation has been actively involved in the development of the Russian financial sector since the early 1990’s, and helped set up several private equity funds and credit lines to finance small and medium size enterprises (SMEs).
Recent investments include Probusiness bank, Russian Standard Bank, and Delta Credit Bank in Moscow, and NBD Bank in Nizhny Novgorod. In trade finance, IFC recently approved a loan to establish, with West LB, a pre-export financing facility for Russian companies.
IFC’s investments in both real and financial sectors are usually accompanied by hands-on technical assistance provided through the Private Enterprise Partnership (PEP), an IFC-managed, donor-funded technical assistance program directed toward local enterprises in Russia and Eastern Europe. The objective of this approach of combining investments with a package of technical assistance is to promote institutional development and help rebuild confidence in the sectors.
IFC’s mission (
www.ifc.org
) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses.
Since its founding in 1956 through the close of the last fiscal year on June 30, 2001, IFC committed more than US$31 billion of its own funds and arranged US$20 billion in syndications for 2,636 companies in 140 developing countries. IFC’s committed portfolio at the end of FY01 was $14.3 billion.
