Commercial Bank DeltaCredit Closed Joint Stock Company

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MIGA has issued a guarantee of $285 million to Société Générale S.A. of Francefor its $300 million shareholder loan to its subsidiary in the Russian Federation, Commercial Bank DeltaCredit Closed Joint Stock Company (DCB). The guarantee is for a period of 10 years against the risks of transfer restriction and expropriation of funds. [1] This is MIGA's first guarantee in support of a specialized mortgage bank in the Russian Federation. MIGA will play a catalytic role in this transaction, as political risk mitigation is a requirement for the shareholder loan. Mortgage penetration in Russiais among the lowest in European emerging markets. The shareholder loan will finance a portion of DCB's expansion plan to meet the rapidly growing demand for residential mortgages, which is driven by increasing incomes, low mortgage penetration, and inadequate housing stock. DCB, Russia's largest private provider of mortgages, plans to fund this expansion by using various financing sources, which may include corporate bonds, syndicated loans, additional shareholder loans from Société Générale, and securitizations. MIGA's support for this project is in line with the World Bank Group's Country Partnership Strategy for the Russian Federation. The strategy recognizes the rapid development of the banking sector, but acknowledges that the level of financial intermediation is small relative to the needs of the economy. This investment will support the development of private financial intermediation and contribute to the increased provision of specialized banking projects, such as mortgage financing, thus broadening the range of financial services available to the population.     [1] The guarantee was cancelled on September 23, 2015.

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