VTB BANK GEORGIA (DEBT EQUITY)

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A US$ 10 million equity and debt financing for United Georgian Bank. The objective of this operation is to strengthen the capital base of United Georgian Bank and to provide it with stable term funding for on-lending to the Georgian bank's customers. The project aims to promote enhanced institutional development and adherence to good standards of corporate governance, thereby strengthening one of the leading banks in Georgia. The project will promote efficient and profitable business practices in the financial sector of the country, thereby supporting the efficiency of markets, the development of the financial sector and better services for local and foreign investors in Georgia. The project will expand the availability of finance for private companies and increase the range of financial services and instruments across the country. The operation should have a strong demonstration effect because of the scarcity of foreign investment in the Georgian financial sector. United Georgian Bank is the largest bank in Georgia in terms of total assets and equity capital. It is organised as a joint-stock company, has a full banking licence, and is supervised by the National Bank of Georgia. The operation envisages providing United Georgian Bank with an equity investment in the form of subscription to ordinary voting shares and a five-year loan, which will be used for on-lending to the United Georgian Bank's customers in the small and medium-sized enterprise (SME) sector of the Georgian economy. US$ 10 million (ECU 9.2 million), all of which is provided by the EBRD. The environmental effect of the operation will depend on the end use of EBRD proceeds by customers of the United Georgian Bank. Use of proceeds (including equity funds) will be restricted by covenants to environmentally benign goods and commodities. As part of the initiative to enhance good corporate governance, environmental policy will be respected by emphasising the risks of financing dangerous or polluting products. United Georgian Bank will implement the EBRD's environmental procedures and report annually. Technical cooperation (TC) assistance will be provided in conjunction with the investment operation. The TC programme will be structured in a focused and rigorous manner in order to deliver immediate benefits in key areas, such as information technology / management information systems, branch network control, asset / liability management, operational procedures and credit / lending systems.