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IFC Disburses Long Term Ruble-Linked Loan in Russia to Bank Center Invest


In Washington:
Irina Likhachova

Phone: (202) 473-1813

Email:
ilikhachova@ifc.org


Moscow and Rostov-on-Don, Russia, February 28, 2005 —The International Finance Corporation, the private sector financing arm of the World Bank Group, today announced the first disbursement of a $5 million Ruble-linked loan to Bank Center Invest, a leading private bank in southern Russia.  This Ruble-linked loan is part of a comprehensive financing package to Bank Center Invest which also contains a $5 million subordinated loan granted by IFC in December 2004. The subordinated loan has been structured to qualify as supplementary capital under the regulations of the Central Bank of Russia.  This project is IFC’s second transaction with Bank Center Invest and builds on a partnership begun in 2002, when IFC provided a $2 million loan for onlending to small and medium sized enterprises (SMEs).

The US$5 million Ruble-linked loan will be used by Bank Center Invest to grant long term loans to SMEs in Rubles. Accordingly, these borrowers will not face currency risk, which arises when such loans are given in US Dollars or Euros.  IFC’s Ruble-linked loan has a five year final maturity, a long term horizon for Rubles, which has become possible because of the continuing stability of the Russian currency and overall improvement of the country’s business environment.


“Bank Center Invest is a good partner for IFC.  It is a leading financial institution in a rapidly growing region of the country in which small and medium sized companies need long term credit to expand their activities.” commented Mr. Edward Nassim, IFC’s Moscow-based Director for Central and Eastern Europe.  “IFC continues to develop products to respond to the needs of our clients in markets around the world.  This long-term Ruble-linked loan allows Bank Center Invest to focus on expanding their loan portfolio with good SME clients without assuming the dangers of volatile exchange rates.” said Mr. Jyrki Koskelo, Director of IFC’s Global Financial Markets Department.


Mr. Vassily Vysokov said “Bank Center Invest began its banking operations in 1992 and is one of the few Russian banks founded at that time which continue to operate today.  Over the years, we have been able to successfully navigate many financial and macroeconomic crises because of prudent risk management.  IFC’s Ruble-linked Loan allows us to continue to manage our risks while allowing us to provide long term financing to our SME clients, which can be repaid in Rubles.  Among our international partners IFC is unique, because it is the only one offering long term financing in Rubles.“


Joint Stock Company Commercial Bank Center-Invest
was established in 1992, and is the largest privately owned bank in the Rostov Region and among the largest 150 Russian banks. Center Invest has traditionally serviced large corporates and SMEs in the Rostov Region. Center Invest has an excellent reputation in its home market which has enabled the Bank to attract the most important enterprises in the region as clients, as well as the second largest retail deposit base. More recently, the Bank has begun expanding to neighboring regions in the south of Russia.


International Finance Corporation (www.ifc.org).
Russia joined IFC in 1993. Since then through the end of June, 2004, IFC has committed $1.8 billion, including $195 million in syndicated loans, to finance 91 projects across a variety of sectors. IFC’s investments spread across the country’s most important sectors including banking, leasing, housing finance, infrastructure, mining, agribusiness, pulp and paper, construction materials, oil and gas, telecommunications, information technologies, retail, and health care.


The International Finance Corporation is a member of the World Bank Group. IFC’s mission is to promote sustainable private sector investment in transition economies, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the emerging markets, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.