November 24, 2004, Moscow—The International
Finance Corporation, the private sector arm of the World Bank Group, announced
the launch of its Russia Banking Sector Corporate Governance Project.
The project will advise Russian banks on improving their own corporate
governance practices and help them introduce corporate governance issues
in their credit assessment practices. The project is funded by a grant
from the State Secretariat for Economic Affairs of Switzerland (seco).
With this project IFC responds to the needs of the Russian banking sector.
According to the survey of 52 Russian banks IFC conducted, the banks identified
corporate governance as a key area for further improvements. Banks came
to realize that good corporate governance helps them attract strategic
investors, raise funds in capital markets, increase operational efficiency,
minimize credit losses, and protect minority and other stakeholders’
rights, which will eventually build investor and depositors confidence
The banks participating in the survey identified specific areas of their
operations that need to be strengthened in order to improve their corporate
governance. These areas include the working practices of the Supervisory
Board and the Management Board, disclosure and transparency policies and
practices, as well as internal control systems. The project provides assistance
to banks on these issues through a series of seminars, individual workshops
and consultations. Selected banks may participate in a comprehensive corporate
governance improvement program that includes a diagnostic of current practices,
tailored recommendations and implementation support.
IFC believes that the safety and soundness of the banking system cannot
solely rely on the efforts of the regulatory authorities. Banks themselves
are called to care for the banking system, as simple compliance alone does
not guarantee success. The project supports Russian banks in their
effort to improve internal governance practices thereby contributing to
the stability of the whole banking system.
The project also works with non-governmental organizations active in the
banking sector on corporate governance issues and self-regulation. Furthermore,
the project fosters the ongoing reform in the banking sector by facilitating
the dialogue between legislative authorities, government agencies and the
His Excellency, Mr. Erwin Hofer, Ambassador of Switzerland to the Russian
Federation, Kazakhstan and Turkmenistan, comments: "Russia and Switzerland
have been enjoying a century old tradition of mutual cooperation in trade
and cultural affairs. Many fine classical buildings of St. Petersburg
were built by architects coming from Switzerland. The Russia Banking
Sector Corporate Governance Project is another example of our good relationship.
It also reconfirms Switzerland's interest in the development of a
sustainable private sector in the Russian Federation."
Davorka Rzehak, responsible for seco's Investment Promotion activities
in the CIS region, says: "With the Russia Banking Corporate Governance
Project, we are able to link Switzerland's long standing tradition in banking
with seco's mission to promote efficient, fair and transparent rules for
the world economy. We are in particular delighted to have IFC once again
as a trusted partner that helps us implementing our mission."
Christian Grossmann, Head of IFC's technical assistance programs in the
former Soviet Union, adds: “This latest initiative of IFC in the
Russian banking sector is a natural extension of its former work on corporate
governance in Russia and its engagement as a major investor in the financial
sector of Russia.”
For the editor:
The International Finance Corporation (IFC) is the private sector arm
of the World Bank Group. The mission of IFC (http://www.ifc.org)
is to promote sustainable private sector investment in emerging economies,
helping to reduce poverty and improve people’s lives. IFC finances
private sector investments in emerging economies, 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.
Russia joined IFC in 1993. Since then through the end of June, 2004,
IFC has committed $1.8 billion, including $210 million in syndicated loans,
to finance 91 projects in Russia across a variety of sectors, including
banking, leasing, housing finance, infrastructure, mining, agribusiness,
pulp and paper, construction materials, oil and gas, telecommunications,
information technologies, retail, and health care.
Technical assistance is a key part of IFC work in Russia. IFC provides
technical expertise to Russian companies on better production and management
practices and links them as suppliers to larger producers. IFC brings
international practices to Russian leasing companies and banks, and advises
companies on corporate governance, environmental, and social issues to
make them more attractive to investors. IFC also works with the government
to improve the business environment.
The State Secretariat for Economic Affairs (seco) is the Swiss Confederation's
competence centre for all the core issues related to the economic policy.
Seco's aim is to create the basic regulatory and economic policy conditions
to enable business to flourish for the benefit of all
In terms of foreign trade policy, seco is active in the shaping of efficient,
fair and transparent rules for the world economy. Seco represents Switzerland
in the large multilateral trade organizations as well as in international
Seco has funded several economic development assistance projects in Russia
as part of its international efforts: the Russia Corporate Governance Project
and the 2003 survey on corporate governance practices in the banking sector.