Moscow, June 23, 2003—The International
Finance Corporation (IFC), the private sector financing arm of the World
Bank Group, announced today an agreement to provide $66 million in loans
to DeltaCredit Bank to help expand Russia’s fledgling mortgage industry.
This is IFC’s second loan to the Bank. IFC extended its first ten-year
$20 million credit line to DeltaCredit for housing finance in 2002. As
of now the Bank has originated over 1,700 mortgage loans and its combined
mortgage portfolio outstanding stands at $65 million.
DeltaCredit Bank is Russia’s first specialized mortgage bank. IFC’s decision
to extend additional $66 million in loans to DeltaCredit shows IFC’s continuous
support for leading financial institutions in the country that bring best
practices to the market, offer high quality services, and contribute to
the deepening of ancillary services necessary for a well-functioning home
mortgage market. The proposed IFC investment is a part of IFC’s
strategy to develop Russia’s housing finance sector by increasing mortgage
origination. In addition, IFC’s financing will promote competition
and stimulate growth in the housing sector by providing affordable housing
finance to Russian households, and develop the country’s financial markets
by expanding an important asset class.
“The development of broad-based housing finance market is an important
building block of the country’s financial sector. A functioning
mortgage system will help create a more liquid housing market and enable
more first-time buyers to purchase their own property. In addition,
the development of the market will create employment in the construction
sector and related industries,” said Edward Nassim, Director of IFC’s
Central and Eastern Europe Department at the signing ceremony in Moscow
“We are proud that collaboration of DeltaCredit Bank and IFC, which began
several years ago, has resulted in such a way and proves that our partnership
is tested by time. For our existing and potential clients it means
that they will continue to get banking service of global standard and will
have best priced mortgage loan products in the market,” added President
& CEO of DeltaCredit Bank Nikolai Chitov.
With population of over 145 million, Russia has the largest potential mortgage
market in Europe. Potential residential mortgage market is conservatively
estimated between $10 billion and $30 billion. However, the current
size of the market in Russia is only about $200 million or less than 0.01%
DeltaCredit Bank is the first full-scale residential mortgage provider
in Russia. DeltaCredit Bank’s mission is to be the best and most respected
provider of mortgage loan products in Russia, which help people build new
quality of life by means of purchasing a new home through the highest quality
banking services, professional advice and support. By offering mortgages
for the first time in Russia, DeltaCredit Bank revolutionizes the way people
live and purchase residential real estate in the country.
Futhermore, IFC has arranged a technical assistance program to be provided
to DeltaCredit Bank by Abbott & Associates Co. and focusing on management
information system and staff training. IFC is also assisting DeltaCredit
Bank, together with Region Investment Company ZAO, to implement mechanism
to safe keep DeltaCredit’s mortgage documentation by introducing the “Custodian”
arrangement, in preparation to the future development of the a secondary
mortgage market in Russia.
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
FY02, IFC has committed more than $34 billion of its own funds and arranged
$21 billion in syndications for 2,825 companies in 140 developing countries.
IFC's worldwide committed portfolio as of FY02 was $15.1 billion for its
own account and $6.5 billion held for participants in loan syndications.
Russia joined IFC in 1993. Since then IFC has invested over $1.3 billion
to finance nearly 70 projects across a variety of sectors. IFC significantly
increased its investment program in Russia in the last two years, investing
$217 million in FY02 (July 1, 2001 – June 30, 2002) and over $500 million
this fiscal year. IFC’s increased activity reflects the improving investment
climate in Russia, greater opportunities in an increasingly broad range
of sectors, and stronger foreign investor interest.