The EBRD is considering provision of senior debt to VTB-24 for on-lending to private micro and small enterprises in underserved regions of the Russian Federation.
The proposed debt funding will allow VTB-24 to meet the continued demand from Russian micro, small and medium-sized enterprises (MSMEs) for financing, a sector which has suffered considerable contraction as a result of the ongoing difficult market conditions and liquidity constraints in the Russian Federation.
Transition impact of this project will be achieved through the provision of funding to MSMEs which continue to be underserved particularly in view of the financial crisis. VTB-24’s extensive branch network will further support penetration into regions not well served by other MSME lenders.
VTB 24, is a specialised MSME, retail and mortgage-focussed bank. It is a 98.2% subsidiary of Vneshtorgbank which is Russia’s 2nd largest commercial bank with majority ownership by the state and holds a market share of approximately 10% of total assets, 5% of which are retail deposits. At end-September 2008, VTB-24 had USD 19,300 million in total assets and USD 2,127 million in total capital. VTB-24 operates through 122 branches and outlets across the Russian Federation.
Up to USD 150 million of senior debt funding.
Up to USD 150 million.
VTB-24 will be required to comply with EBRD's Performance Requirements for Financial Institutions, and should continue to implement the EBRD's Environmental and Social Procedures for Small and Micro Loans with an Environmental Risk Categorisation List (as revised in 2008) to the MSME sub-loans. Eligibility criteria for sub-loans will need to be reviewed for compliance with the Performance Requirements for Financial Institutions. VTB-24 will adhere to the EBRD's Environmental and Social Exclusion and Referral Lists, and submit annual environmental and social reports to the Bank.
No previous TC has been received by VTB-24. The bank will, however, receive TC under the “EU Northern Caucuses MSME Development: Financing Component” which is targeted at increasing funding for small businesses in North Ossetia. The Procurement Notice for this has been published.
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