RSBF - KMB Bank - Equity

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(i) Participation in a proposed capital increase in KMB Bank. (ii) Proposed provision of senior debt to KMB Bank for on-lending to private micro and small enterprises in the Russian Federation and for mortgage finance. The proposed equity and debt funding will allow KMB Bank to meet the continued demand from Russian micro, small and medium-sized enterprises (MSMEs) for medium-term financing, an area which remains underserved by the Russian financial sector. This will enable the bank to increase its competitiveness in the local retail financial market and further diversify its customer base. In addition, the capital increase will allow KMB to develop its activities in the broader retail finance sector with the close involvement of the majority owner, Banca Intesa of Italy. The Bank has several existing projects with KMB. The previous PSD was issued under DMT 6245: RSBF – KMB Bank in 1999 and later updated in 2003. Transition impact will be achieved through the strengthening of a highly competitive bank which will continue to focus on reaching smaller entrepreneurs who traditionally have little access to medium term funding. Further, the proposed project will ensure that small businesses are provided with more financial alternatives, and will thereby foster competition in the sector. KMB Bank is a leading provider of finance to micro, small and medium sized enterprises across the Russian Federation. The bank was established by EBRD and a number of other investors in 1999 after the Russian financial crisis had severely affected the ability of the country’s financial sector to effectively provide funding to MSMEs. KMB currently operates via 8 branches and 47 sub-branches in 24 of Russia's regions, and since its creation has provided over 150,000 loans to Russian entrepreneurs for a cumulative volume of over USD 1.3 billion. In September 2005 Banca Intesa of Italy purchased a majority stake in KMB Bank. EBRD remains a minority shareholder with 25%. Banca Intesa brings to KMB Bank considerable experience in retail and SME banking both in Italy and across Eastern Europe, and will spearhead KMB’s continued dynamic growth in the future. Up to USD 25 million of proposed equity funding and up to USD 75 million of senior debt funding. Up to USD 200 million. KMB Bank currently complies and will continue to comply with EBRD’s Environmental Procedures for Small and Micro Loans, which include: compliance with applicable national environmental, health, safety and labour requirements; adherence to the Environmental Exclusion and Referral Lists; and submission of annual environmental reports to the Bank. EUR 7.4 mln. has previously been provided to KMB Bank by the European Commission for the expansion of KMB’s branch network and provision of MSE finance in selected Russian regions. Reiner Mueller-Hanke, Chief Executive Officer, KMB Bank, 31 Shabolovka St., Building B, 115162 Moscow Russia T: +7 495 783 4457 F: +7 495 789 6827 Email: Mueller-Hanke_r@kmb.ru Website: http://www.kmb.ru