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MIGA’s goal is to promote foreign direct investment into developing countries to support economic growth and more.

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Hands husking peas into a basket full of peas

Learn about the progress MIGA is making in its mission to support economic growth, reduce poverty and improve people’s lives.

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Explore different types of political risk insurance guarantees provided to investors and lenders.

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Explore global projects that support economic growth, reduce poverty and improves people’s lives.

Serbia

RBI Central Bank Reserves Coverage

€300 million
Banking
Summary of Proposed Guarantee
Proposed
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Project Description

This summary covers equity investments by Raiffeisen Bank International AG (RBI) in its subsidiary in Serbia, Raiffeisen Banka a.d., Beograd (RBRS). The investor has applied for additional MIGA guarantees of up to EUR300.0 million under the existing RBI Central Bank Reserves Program in Serbia.

Vienna-based RBI is a universal banking group that has operated for over 30 years in Central, Eastern and Southeastern Europe (CEE), with subsidiary banks in 12 CEE markets. RBI’s subsidiary banks are required to maintain reserves at the central banks in their respective jurisdictions, generally based on the volume of customer deposits that these subsidiaries have. This exposure leads to higher risk weights on assets at the consolidated level, resulting in increased capital allocation for country risk exposure. At the consolidated level, the risk weighting determines the amount of equity required to maintain a specified capital adequacy ratio in accordance with European banking regulations.
 

Environmental Categorization

The MIGA project will support all lending activities at RBRS. The bank provides financial products and services to individuals, small and medium enterprises (SMEs) and corporate clients in Serbia. RBRS supports SME and corporate clients in sectors mostly considered medium-risk sectors; the Environmental and Social (E&S) risks and impacts associated with these sectors are considered limited and can be addressed through mitigation measures. The project has thus been categorized as FI-2 according to MIGA’s Policy on Environmental and Social Sustainability (2013).

The main E&S risks of this project relate to RBRS’s ability to identify, assess, and manage the E&S risks and impacts associated with its lending activities and the management of labor matters. MIGA analyzed RBRS’s portfolio for types of transactions, tenor, size, industry sectors, and exposure to MIGA’s Exclusion List. MIGA also analyzed the bank’s E&S risk management procedures in line with the requirements of Performance Standard 1: Assessment and Management of Environmental and Social Risks and Impacts (PS1), and the bank’s labor practices in line with the requirements of Performance Standard 2: Labor and Working Conditions (PS2). The applicable E&S requirements for this project will be: (i) MIGA Exclusion List; (ii) applicable E&S laws and regulations in Serbia; and (iii) the Performance Standards.

As of June 2022, RBRS’s portfolio included retail loans at about 29%; project finance/corporate loans at 63%; SME loans at 3%; and loans to financial institutions at 5%.  The main sectors supported include wholesale and retail trade, manufacturing, construction and transportation and storage.  RBRS has limited exposures to activities on the MIGA Exclusion List – production or trade in alcoholic beverages, excluding beer and wine, and production or trade in tobacco.

As a MIGA client (since 2015), RBRS has policies and procedures in place for E&S risk management and labor management. RBRS implements an E&S risk management system (ESMS) and has a designated E&S officer who is responsible for the implementation of the ESMS. The ESMS includes the applicable requirements defined as the MIGA Exclusion List, compliance with national laws and regulations, and application of the Performance Standards (PSs) to eligible sub-projects. The implementation of the ESMS is considered adequate.  In addition, RBRS has emergency response procedures in place which meet the requirements of PS1, and the banks’ labor practices are also in line with PS2.

Based on the above review, RBRS’s implementation of MIGA’s E&S requirements is considered adequate. RBRS will continue to report periodically to MIGA on its portfolio, the implementation of the ESMS and labor practices.


Development Impact

The project is expected to support RBI’s overall business strategy in Serbia. MIGA’s guarantee allows RBI to achieve RWA relief at the group consolidated level and provide the enabling conditions to the parent bank to pass the benefits of this support to its operating subsidiaries. As reserves, held at each respective central bank, attract lower risk weights because of MIGA, assets in Serbia can be deployed more productively, thereby either accelerating the pace of leveraging (i.e. expansion of loans to customers) or slowing down the pace of deleveraging (i.e. retention of loans to customers).

The aim of MIGA’s proposed guarantees is to help RBI reduce the risk of some of its assets, which would lead to a reduction in the group’s RWA on a consolidated basis. The RWA capacity that is freed up is expected to be used by RBI to support its lending operations in Serbia, including to SMEs and climate finance activities.

 

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MIGA supports its clients (as defined in MIGA Policy on Environmental and Social Sustainability) in addressing environmental and social issues arising from their business activities by requiring direct investment clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities. MIGA support to Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations as per the requirements of Performance Standards 1. 


In addition, Affected Communities have unrestricted access to the Compliance Advisor/Ombudsman (CAO), the independent accountability mechanism for MIGA. The CAO is mandated to address complaints from people affected by MIGA-guaranteed business activities in a manner that is fair, objective, and constructive, with the goal of improving environmental and social project outcomes and fostering greater public accountability of MIGA.


Independent of MIGA management and reporting directly to the World Bank Group President, the CAO works to resolve complaints using a flexible, problem-solving approach through its dispute resolution arm and oversees project-level audits of MIGA’s environmental and social performance through its compliance arm.


Complaints may relate to any aspect of MIGA-guaranteed business activities that is within the mandate of the CAO. They can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of a MIGA-guaranteed business activity. Complaints can be submitted to the CAO in writing to the address below:


Compliance Advisor/Ombudsman

International Finance Corporation

2121 Pennsylvania Avenue NW

Room F11K-232

Washington, DC 20433 USA

Tel: 1 202 458 1973

Fax: 1 202 522 7400

E-mail: cao-compliance@ifc.org

 

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