The provision of a senior pre-privatisation convertible loan of up to US$ 50 million in favour of Uzbek Industrial and Construction Bank (UzPSB), a joint stock commercial bank established in Uzbekistan. The equivalent of 20 per cent of the EBRD loan will be used for supporting energy efficiency, renewable energy, climate resilience investments. The remainng amount will on-lent private-sector borrowers. The conversion of the loan is at the EBRD's full discretion and will depend on the progress of UzPSB's privatisation.
The project aims to contribute to privatisation of UzPSB via extending a convertible loan along with other International Financial Institutions (IFIs) assisting the government of Uzbekistan with banking sector reforms. The proceeds of the loan will be used to promote private entrepreneurship and green investement.
ETI score: 71
The project will enhance Uzbekistan's financial sector resilience by supporting the commercialisation of one of the country's largest banks and by facilitating increased private sector participation in its ownership. The project will support improvements in UzPSB's corporate governance including specialised corporate governance training. Upon the conversion, the EBRD will have theright to nominate a directros to UzPSB's Board of Directors of UzPSB. The transaction is part of EBRD's ongoing privatisation policy dialogue in the country's financial sector.
UZBEK INDUSTRIAL AND CONSTRUCTION BANK JSCB (UZPROMSTROYBANK)
UzPSB is the oldest banks in Uzbekistan, ranked third by assets (13 per cent of the market share). The bank is majority-owned by the state of Uzbekistan, primarily via the Ministry of Finance. At end of the first half of 2021, its equity stood at US$ 651 million and total assets at US$ 4.78 billion. UzPSB aims to become the first green bank in Uzbekistanby supporting sustainable environmental transition of its clients. It has a network of 44 branches and 146 banking service centres, with 3,885 employees servicing 1.5 million clients across the country. UzPSB is rated by Fitch (BB-/stable) and by S&P (BB-/ Negative).
EBRD Finance Summary
Total Project Cost
The EBRD's expertise will help UzPSB achieve and maintain good corporate governance standards that exceed local requirements and support continued adoption of best practices. The EBRD will consider providing TC to the bank focusing on its capacity building to fast-forward the adoption of good international practices of climate governance, risk management and disclosures. The EBRD's involvement alongside other IFIs will strengthen reform advocacy and help keep UzPSB's transformation on track. The EBRD's presence as a creditor and, potentially, a shareholder is expected to help ensure that future operations of UzPSB are based on international business and corporate governance standards, thus sending a positive signal to potential future private investors.
Environmental and Social Summary
Categorised FI (ESP, 2019). UzPSB Bank is an existing client of the Bank. Environmental and Social Due Diligence (ESDD) included a review of the implementation of the Company's Environmental and Social Management System (ESMS). The ESMS is considered generally aligned with Performance Requirement (PR) 9. The finance is anticipated to be used in private sector investments including energy efficiency, renewable energy, climate resilience investments and the ESMS will need to be enhanced to accommodate potential higher risk transactions prior to their approval under this sub-loan (financing of any Category A projects will be excluded). In addition, UzPSB will need to continue to comply with PR2 and 4 and the EBRD's Environmental and Social Risk Management Procedures for Corporate, SME and Micro Loans. TC support to enhance the ESMS is envisaged as part of the project. Upon conversion to equity, PR9 will apply to UzPSB entire portfolio (any new exposures as of signing) and the ESMS will be further upgraded as required prior to conversion.
Technical Cooperation and Grant Financing
TC funds may be sought to help develop specific areas of the bank i to be further discussed and decided jointly with UzPSB and other involved IFIs. TC support to enhance the ESMS will be co-ordinated among IFIs participating in the project. Additional TC support will be necessary if the EBRD becomes a shareholder for on-going capacity support, monitoring of the ESMS implementation. The EBRD will also consider providing TC to the Company focusing on capacity building to fast-forward adoption of good international practices of climate governance, risk management and disclosures.
Company Contact Information
Akmal Palvanov, Director, FI&IR Department
+99871 120 45 00 (ext. 1110)
+99894 711 16 55
3, Shakhrisabz str. Tashkent 100000, Uzbekistan
PSD last updated
17 Dec 2021
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