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Summaries of proposed guarantees are provided prior to Board consideration and final contract signing, and therefore are subject to change. Project briefs are disclosed after contract signing and do not reflect subsequent modifications (e.g., changes in guarantee amount).
Project Name Joint Stock Commercial Bank for Social Development Ukrsotsbank
Guarantee Holder UniCredit Bank Austria AG
Investor Country Austria
Host Country Ukraine
Sector Banking
Gross Exposure ($million) 247
Fiscal Year 2009
Status Proposed
Project Number 7585
Environmental Category FI
Date SPG Disclosed October 10, 2008
Project Board Date October 28, 2008

This summary covers the expansion of operations of Joint Stock Commercial Bank for Social Development Ukrsotsbank (USB) of Ukraine, funded by a $260 million shareholder loan from UniCredit Bank Austria AG (UBA), a sub-holding company of UniCredit Group of Italy. The investor has applied for a MIGA guarantee of $247 million to cover the shareholder loan for a period of up to seven years against the risks of transfer restriction, expropriation, and war and civil disturbance.

USB, which was acquired by the Group through UBA in January 2008, is Ukraine’s fourth largest bank. UBA’s long-term shareholder loan is expected to improve USB’s asset-liability management and allow the bank to expand its operations in a prudent manner. While there is a demand for long-term loans in Ukraine, there is a shortage of local long-term funding. This loan is designed to help USB to fill the gap and improve the bank’s structural liquidity ratio. This would be MIGA’s second guarantee in support of USB.

Environmental Categorization

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

Development Impact

One of the two pillars of the World Bank Group’s country partnership strategy for Ukraine is sustaining growth and improving competitiveness, which places emphasis on the need to make the country’s financial sector deeper and more stable in order to facilitate business growth and support private investment.

By supporting this project, MIGA will encourage international strategic investors to participate in Ukraine’s banking sector. The activities of foreign banks in the country are expected to help develop the financial sector with capital injections, new product development, and industry best practices in terms of sophisticated risk management techniques and improved transparency.

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