NBD

completed

This investment is part of the Russian Multi-Bank Credit Line project to provide funding to several regional banks in Russia. NBD was established in 1992 and is currently the fourth largest bank in its region by assets, with 20% of the local banking business. The bank focuses its activities on small and medium enterprises (SMEs), entrepreneurs, and increasingly on retail banking (which now accounts for over 20% of the loan portfolio and the majority of deposits). As of December 31, 2000, the bank''s total assets amounted to US$29.5 million equivalent and capital to US$3.1 million equivalent. In March, NBD''s capital increased to US$6.2 million equivalent. Currently, there are virtually no commercial sources of long-term funding for Russian banks, unless they belong to one of the large financial industrial groups. IFC''s financing will enable NBD to expand its lending activities to the local SME sector and to mid-sized enterprises in the region. This financing will be combined with a program of technical assistance to improve the bank''s operations. The Russian financial sector is seriously underdeveloped and does not function efficiently in either mobilizing or allocating resources. The resulting shortage of financing is a major constraint to the development of a productive sector of the economy. This project will contribute to rehabilitating and restoring confidence in the sector by helping a regional viable bank and will provide credit to help the development of regional productive enterprises. The investment will also allow the bank to increase its lending, with longer maturities, to small and mid sized Russian corporates, thus supporting a sector of the economy which will be a key to achieving sustained economic growth and generating employment in the next few years.