Financed ProjectsTBC Bank 2 (local currency)

Identification Code:

OP/17/0071

Total Operation Cost:

120.000.000

Maturity:

36 months

Operation Status:

Description and Purpose of the Operation:

TBC Bank 2 (local currency)

Countries of Operation:

Georgia (100,00 %)

Financial Product:

SME's

Sector:

Financial Institutions

Domain:

Private

Borrower/Client:

2nd Local Currency SME Facility to TBC Bank

Co-Financiers/Participants:

N/A

Guarantors/Sponsors:

N/A

Developmental and Regional Cooperation Impact:

This operation involves a GEL 120 million facility with TBC Bank, for on-lending to eligible small and medium sized enterprises (SMEs). Economically, it is expected to have modest but favorable benefits for the Georgian economy, the most relevant being additional tax revenue gains from increased economic activity resulting from the financing provided, increases in employment, and multiplier effects for other parts of the economy. Since it is a local currency operation accompanied by issuance of a GEL denominated bond by BSTDB, the operation is innovative and will have a high demonstration impact. In addition, it will have benefits that result from local bond issuance such as no foreign exchange risk for the borrowers, and a modest but positive strengthening and deepening of the domestic financial market. The regional cooperation element is low, because it is not yet known who the end beneficiaries of the facility will be, but most of the SMEs are likely to be mainly oriented to the domestic market. Nevertheless, the presence of TBC Bank Group in other BSEC countries increases the potential for the realization of regional cooperation benefits.

Environmental Classification and Impact (summary):

SME financing is normally not likely to generate significant negative environmental and social impact. Nevertheless, there are certain environmental and social risks associated with such financing for which the FI needs to have the appropriate capability to ensure that these risks are properly assessed and mitigated. The Environmental and Social Assessment of TBC Bank focused primarily on the existing environmental and social management arrangements, such as policies, procedures, rules and responsibilities, and whether the company is engaged in activities prohibited by the Bank as stipulated in the BSTDB Environmental and Social Exclusion List. The assessment concluded that TBC Bank has instituted a functioning environmental and social management system which was found commensurable with the level of environmental and social risks associated with its SME and trade financing activities. Its Board of Directors adopted the Environmental and Social Policy as of January 2012 and it is an integral part of the responsible corporate governance. The Client’s Environmental and Social procedures include transaction screening and categorization, assessment, mitigation and control, as well as monitoring and reporting of environmental and social risks. Both the policy and the procedures are based on IFC Performance Standards (PS), EBRD Performance Requirements (PRs) and ADB standards. The Borrower reported that it is not engaged in financing any activities contained in the Bank’s Environmental and Social Exclusion List. Overall, it is expected that the Operation will contribute to promoting small and medium businesses in Georgia and positively impact on poverty alleviation, stimulate self-employment, create new jobs and generate revenues.

Operation Leader:

Financial Institutions I

E-mail:

fi1@bstdb.org