Distressed Asset Investments

Location:

Russia

Project number:

41415

Business sector:

Non-depository Credit (non bank)

Notice type:

Private

Environmental category:

FI

Approval date:

12 Oct 2010

Status:

Complete

PSD disclosed:

15 Oct 2010

Translated version of this PSD: Russian

Project Description

The EBRD is considering co-investing with EE-DF AG in a new company to be incorporated in Switzerland (the “Investee Company”) with the sole objective of acquiring non-performing retail loans (“NPLs”) from Russian financial institutions.

Transition Impact

The project will mobilise external funding to remove NPLs from bank balance sheets and contribute to the development of an active market for the pricing and transfer of NPLs in Russia.

The project will also foster the development of a sound and ethical servicing industry in Russia by building servicing capacity that promotes best international practices.

The Client

The Investee Company will be incorporated in Switzerland in conjunction with EE-DF AG of Switzerland (the “Investment Partner”), an existing joint venture company of Intrum Justitia, East Capital Explorer and East Capital Financials Fund.

Intrum Justitia is Europe’s leading credit management services company with around 3,200 employees, present in 22 European markets and listed on NASDAQ OMX Stockholm Mid Cap.

East Capital is an independent asset manager with approximately EUR 4.6 billion under management and specialising in Russian and Central and Eastern European investments. East Capital Financials Fund and East Capital Explorer are managed by East Capital.

EBRD Finance

Up to RUB 800 million in equity and shareholder loans to the Investee Company.

Project Cost

RUB 2,670 million in total including co-financing from EBRD’s Investment Partner.

Environmental Impact

Categorised FI (2008). Servicers and Investment Partners will be required to comply with PR2 and 9. The main environmental and social risks lie in the debt collection processes followed by the servicers. The management teams of the three selected debt servicers, Morgan & Stout, Pristav and FASP, are very well aware of these risks. The three servicers are among the leaders in Russia and are reportedly dedicated to implementing non-abusive collection methods. They are either active members or founders of NAPCA (the National Association of Professional Collection Agencies in Russia). The servicers and their sub-contracted agencies will need to agree to develop and implement a code of conduct in line with NAPCA's Code of Ethics, develop and implement, if not already done so, a grievance mechanism or customer complaints mechanism for use by debtors and develop and implement a mechanism for monitoring collectors’ conduct and develop and implement a system for the protection of lone collection workers. The Bank will monitor both the development of acceptable procedures and the implementation of those procedures over the life of the project.

Technical Cooperation

None.

Company Contact

Mr. Gijsbert Wassink, Intrum Justitia Debt Finance AG, g.wassink@ch.intrum.com

Ms. Hanna Loikkanen, East Capital International AB, hanna.loikkanen@eastcapital.com

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

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