Mobiasbanca Equity Investment

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Project Description This PSD relates to a historical Bank project approved some years ago, and does not represent a new approval, or allocation of new funds.  Disclosure of this PSD was deferred in accordance with the transparency framework in place at the time, but due to an administrative oversight, was not subsequently disclosed In December 2007, the EBRD approved subscription of up to 10% of capital in JSC Mobiasbanca for an amount up to MDL 55.3 million (then €3.3 million).  At the time of the proposed transaction, JSC Mobiasbanca was the fifth largest private bank in Moldova, and was a leader in the retail market segment.  By demonstrating commitment to strategic investors in the Moldovan market, the transaction was also a key component of the Bank’s work to increase transparency and improve corporate governance practices in the country. Project Objectives The project was designed to support the entry of a strategic investor into the Moldovan banking sector, strengthen the company’s capital base, in turn facilitating development of its operations, enhancing competition and improving the quality of banking services offered in Moldova. Transition Impact EBRD subscription in shares was anticipated to have a demonstration effect and set standards for corporate governance and business conduct in Moldova, to result in the transfer of skills regarding best international banking practice, and to increase operational efficiency in order to facilitate business growth, expansion of market share, and increased financial intermediation, thereby enhancing competition in the banking sector in Moldova. Additionality In addition to undertaking dialogue regarding improvement of corporate governance standards, the Bank’s local expertise and international status provided comfort to strategic investors in Moldova.   The EBRD’s reputation as a constructive partner committed to the long-term development of its clients also assured existing shareholders and management. Environmental and Social Summary This project was classified as Environmental Category FI, and the fund was therefore required to comply with the Bank’s Environmental Procedures for Intermediated Finance through Local Banks across the entirety of its lending and investment operations.  Moreover, JSC Mobiasbanca was required to adhere to the Bank’s Environmental Exclusion and Referral Lists and submit annual environmental reports to the Bank. Technical Cooperation n/a - none Implementation Summary The key objectives of the transaction were to: (i) support the entry of a strategic investor into the Moldovan banking sector; and (ii) strengthen Mobiasbanca’s capital base to facilitate development of its operations. By subscription to Mobiasbanca’s shares and investment of EUR 3.3 million as capital contribution the Bank achieved both objectives. The EBRD's plan to implement the project, and its ultimate implementation, were welcomed by and helped to sustain SG's commitment to its investment in Mobiasbanca via a capital increase by EBRD (8.84%) alongside BRD (20%). The Bank’s investment was an important risk-mitigating factor for the investor in terms of the Bank’s local experience in the market and relationships with the local authorities. The capital increase was utilised by the Mobiasbanca to finance its loan portfolio growth.