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Summary of Project Information (SPI)
This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.
Commercial Banking - General
Reg Ind, Financial Markets, EMENA
Date SPI disclosed
November 17, 2004
Projected board date
December 17, 2004
Signed: April 11, 2005
Approved: April 5, 2005
Description of company and purpose of project
The proposed transaction is to invest up to $20 million (or Euro equivalent) in form of a senior loan to support the growth of Banca Comerciala “Ion Tiriac” S.A. (Banca Tiriac, BT or the Bank), the first private bank in Romania founded in 1991, a medium-sized, well-capitalized bank, headquartered in Bucharest, Romania. IFC’s loan is intended to help BT to meet demand for medium term financing from its SME and corporate clients in Romania. With EU accession for Romania projected to happen in 2007, Romanian corporates and SME’s will need to upgrade their environmental and quality requirements to meet standards and remain competitive in a larger EU market. IFC proposed loan is intended to partially meet this demand by providing medium term resources to the Bank to match fund their corporate loans. In addition to the senior loan, IFC will consider a subordinated loan of up to $7.5 million (or Euro equivalent), that will qualify as Tier II capital as per National Bank of Romania guidelines. The subordinated loan is intended to increase the Bank’s Capital Adequacy Ratio in line with its projected growth in risk assets and the expansion of branch network. Additional benefits will include in reducing the Bank’s maturity mismatch on its balance sheet and increase the amount available for lending under the single obligor limit.
Project sponsor and major shareholders of project company
Founded in 1991, Banca Tiriac was the first privately owned Romanian bank, it provides a full range of banking services to corporate and retail clients in Romania. As at end-2003, Banca Tiriac was the tenth largest bank in Romania by net assets, representing 3.2% of the system. It currently has 58 branches (30 branches, 25 agencies and 3 working points), 200 ATMs and 1,550 POSs (point of sale card readers).
Banca Tiriac is majority owned by Mr. Ion Tiriac, a well reputed businessman and a former Romanian Davis Cup tennis champion. Mr. Tiriac owns about 73.6% of the Bank directly and indirectly. From sports management, Mr. Tiriac has diversified into business interests in the financial sector (including insurance, in a joint venture with Allianz Insurance, the second largest insurance company in Romania and one of the most successful in the sector), tourism, transportation and real estate.
EBRD owns 5.4%. of shares in the Bank with the remaining 21% held by around 5,537 legal entities and individuals and private investors.
Total project cost and proposed IFC investment
The proposed investment consists of up to US$20.0 (or Euro equivalent) in form of a senior loan. IFC is also considering the possibility of providing a subordinated convertible loan for up to $7.5 million (or Euro equivalent).
Location of project and description of site
The location of this project is in Bucharest, Romania.
Project Development Impact and IFC's Role
By strengthening a private Romanian bank, IFC will boost the development of the local banking sector through balance sheet strengthening and institution-building. The project would facilitate access to term lending by the growing base of local entrepreneurs through a Romanian bank that is strongly oriented to corporate, SME and retail lending. Environmental standards, quality assurance and efficiency should all improve as these companies seek to become competitive prior to EU accession. During the environmental review of eligible borrowers in the real sector that will be carried out by BT, the companies will be introduced to the IFC environmental compliance standards. The Bank’s staff will also benefit from IFC environmental training and implement specific environmental management plans.
In the financial sector, IFC’s focus has been to build and strengthen financial intermediaries in Eastern Europe. The banking sector in Romania is still developing and IFC believes that there is a significant opportunity to accelerate its growth in this country. By granting this loan IFC will help expand a reputable bank in Romania and strengthen the banking sector. It will also increase the positive impact on increased access to finance for the local corporate and SME sector. Finally, IFC will play a potentially strategic role in strengthening and adding value to the bank before a possible sale to a strategic investor.
Environmental and social issues - Category FI-1
This is an FI type 1 project according to IFC’s environment and social review procedure. Banca Tiriac must implement an environmental and social management system to ensure that relevant lending complies with host country environmental and social requirements.
To contact the project company, please write to:
George Toma Mucibabici
First Vice President
Banca Comerciala “Ion Tirac” S.A.
City Business Center, 3 Nerva Traian St.
Complex M101, 3rd District
Tel: 4021 3025 800 801
Fax: 4021 3025 805
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