Project summary document

Project description
and objectives:

Proposed capital increase of International Moscow Bank, Russia's sixth-largest bank, due to its merger with Bank Austria Creditanstalt (Russia).

The EBRD proposes to finance part of the equity increase by IMB as a result of the Boards of Directors of IMB and BACAR having decided to merge the two banks. They have effectively become two Russian subsidiaries of HypoVereinsbank (HVB) following HVB's acquisition of Bank Austria Creditanstalt AG, Vienna. and BACAR. HVB is the largest existing shareholder of IMB (41 per cent).

The merger would be conducted through conversion of 100 per cent of BACAR’s common stock into newly issued ordinary shares of IMB, and would allow the EBRD to maintain its 10 per cent shareholding in IMB.

Upon the merger, the shareholders' structure of IMB would remain approximately unchanged.

The merger would enable IMB to: (1) create a bigger and even more effective bank by enlarging its capital base and expanding cross-selling opportunities between BACAR and IMB's products and their respective customer base; (2) realise economies of scale; and (3) expand on the retail strategy initiated by BACAR.

Transition impact:

The proposed investment will provide a market-based source of competition to the largest domestic banks, including the CBR-owned Sberbank and Vneshtorgbank, which dominate the banking sector.

In addition, by supporting a Russian bank with strategic foreign shareholders, the project will facilitate direct foreign investment in the Russian banking sector.

Finally the project will have a significant "demonstration effect" as it is the first major bank merger in Russia and therefore will be watched carefully by the market as a model of how such a merger can be done.

The client:

International Moscow Bank (IMB) is the largest bank with majority foreign ownership established and operating in Russia, with headquarters in Moscow.

EBRD finance:

Equity investment of up to US$ 8 million (€ 9 million) in ordinary shares of IMB in order to maintain the EBRD's 10 per cent shareholding in IMB following its acquisition of Bank Austria Creditanstalt (Russia) (BACAR).

Six-month extension of the final maturity of the first tranche of the subordinated loan (from 11 February 2006 to 11 August 2006) in order for IMB to maximise its usage as Tier 2 capital.

Total project cost:

Total project costs are up to US$ 8 million (€ 9 million).

Environmental impact:

The project will not have significant environmental impact since the funds to be provided are not for further on-lending.

Technical
cooperation:

None.

For consultant opportunities for projects financed by technical cooperation funds, visit procurement of consultants.

Company contact:

EBRD contact:

Viktor Marchenko, Operation Leader: marchenv@ebrd.com

Business opportunities:

For business opportunities or procurement, contact the client company.

General enquiries:

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168; Fax: +44 20 7338 7380
Email: projectenquiries@ebrd.com