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Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature.
Project Name OJSC Raiffeisen Bank Aval
Guarantee Holder Raiffeisen Zentralbank Österreich AG
Investor Country Austria
Host Country Ukraine
Sector Banking
Gross Exposure ($million) 285
Fiscal Year 2009
Status Proposed
Project Number 7438
Environmental Category FI
Date SPG Disclosed October 10, 2008
Project Board Date October 28, 2008

This summary covers a guarantee for Raiffeisen Zentralbank Österreich AG (RZB)’s $300 million shareholder loan to OJSC Raiffeisen Bank Aval (RBAV) in Ukraine. RZB has applied for guarantee of $285 million from MIGA for a period of up to 15 years against the risks of transfer restriction and expropriation of funds.

The shareholder loan is expected to lengthen RBAV’s funding base and enable the bank to expand its overall portfolio of loans, including to small and medium-sized companies (SMEs). Also, RBAV will continue to benefit the sector in terms of transfer of know-how and best banking practices. 

As of the end of 2007, RBAV was the country’s second-largest bank, with one of the largest local networks, comprising 1,179 business outlets. At the end of 2007, RBAV was serving 4.3 million retail customers, including 196,000 SMEs, and more than 9,000 corporate customers.

Environmental Categorization

The project is a Category FI under MIGA’s environmental review procedures.

Development Impact

The Country Partnership Strategy (CPS) places emphasis on the need to make the financial sector deeper and more stable in order to facilitate business growth and support private investment.  The Ukrainian banking sector is undergoing an important transformation with the recent entry of strategic foreign investors through acquisitions. The increasing foreign participation in the sector, which MIGA continues to support with this project, is expected to lead to a more rapid transfer of product and risk management expertise, strengthen the sector’s capitalization and improve access to longer-term and more stable funding.  Besides, this investment will lengthen RBAV’s funding base and enable the bank to expand its overall portfolio of loans, including to SMEs and the agriculture sector, two focus areas in the CPS for Ukraine. 

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