VTB Bank Georgia Capital Increase

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The proposed project is USD 10 million debt financing and equity investment being part of approximately USD 11 million capital increase announced by UGB and maintaining EBRD’s 18% shareholding in UGB. The objective of this operation is to strengthen the capital base of United Georgian Bank (UGB) and to provide it with stable term funding for on-lending to private Micro, Small and Medium enterprises (MSEs and SMEs). The project will support further growth of UGB, enabling it to implement its business plan and increase its competitiveness in the local market. The project will support the further development of UGB and assist the strategic investor in developing one of the largest banks in the country. It will also ensure good corporate governance standards. Further the project will increase financial intermediation through medium-term funding for Georgian SMEs and MSEs, a market which has had limited access to the financial system. UGB, established in 1995 through the merger of three formerly state-owned banks, is the fourth largest private bank in Georgia in terms of total assets. A controlling majority equity stake was purchased by Vneshtorgbank, Russia in January 2005. The project will provide UGB with an capital increase via equity investment in the form of subscription to ordinary voting shares and a five-year loan, which will be used for on-lending SMEs and MSEs. USD 10 million plus equity investment amount, all of which is provided by the EBRD. United Georgian Bank will be required to comply with EBRD’s Environmental Procedures for Small and Micro Loans and the Environmental Procedures for Local Banks which require adherence to the Bank’s Environmental Exclusion and Referral List, compliance with the applicable national environmental, health and safety requirements and submission of an Annual Environmental Report to the Bank. Existing TC is being provided to strengthen UGB’s MSE lending procedures, this is being funded by EU. No additional TC is envisaged at this stage. Irakli Medvabishvili, Deputy General Director, UGB E-mail: irakli@ugb.com.ge