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Europlan SME Leasing Facility

Russia | Financial Institutions

Identification Code:: OP/19/0041
Total Operation Cost:: — RUB
Maturity:: 36 months
Operation Status:: BSTDB Approved Amount – Approval Date

2.500.000.000 RUB – 29 Nov 2019
: BSTDB Signed Amount – Signed Date

2.500.000.000 RUB – 28 Aug 2020
: Status:
Completed
Description and Purpose of the Operation:: Provision of up to RUB 5 billion in two parts: A committed tranche of up to RUB 2.5 billion; and An uncommitted tranche of up to RUB 2.5 billion, which will be syndicated by the Bank, through loan participation or any other acceptable lending structures, to eligible financial institutions. The Facility will be used by the Borrower exclusively for the purpose of entering into eligible lease transactions in Russia in accordance with the criteria set by the Bank.
Countries of Operation:: Russia (100,00%)
Financial Product:: SME's
Sector:: Financial Institutions
Domain:: Private
Borrower/Client:: Europlan is No.1 independent automotive leasing company in Russia with an estimated market share of 15% of the new leasing transactions. The Company leases passenger cars, commercial vehicles and smaller construction equipment to legal entities (predominantly SMEs) and private individuals. Europlan serves customers throughout the Russian Federation via its own distribution network of 76 offices.
Co-Financers/Participants:: n/a
Guarantors/Sponsors:: n/a
Developmental and Regional Cooperation Impact:: The operation involves medium-term SME leasing facility, which can be drawn in RUB or USD at the Borrower’s discretion (in the latter case it should be hedged by the Borrower), that is expected to have modest but favorable economic benefits for the Russian economy. The most relevant of these is the additional tax revenue gains from increased economic activity resulting from the financing provided. In addition, the financing will likely help further enhance benefits such as increases in employment, improved competitiveness, and multiplier effects for other parts of the economy. The regional cooperation element is likely to be limited. The recipient of the funds leases passenger cars, commercial vehicles and smaller construction equipment to legal entities and private individuals. Regional cooperation element will be significant in case these vehicles are imported from BSTDB member countries (which is not the case). The operation meets its second mandate of contributing to economic development in the member States, particularly if the operation improves access to commercial vehicles and construction equipment in general. The operation might have positive indirect impact on increased manufacturing, increase in employment and easier access to equipment, which are among top objectives of the country strategy for Russia.
Environmental Classification and Impact:: Financing leasing activities through Financial Intermediaries (FIs) implies certain environmental and social (E&S) risks and impacts. Usually these are associated with the fact that FIs may lack capacity to properly identify, assess and mitigate these risks. This is especially relevant when leased assets bear medium to high E&S risks e.g. manufacturing/process equipment, conventional construction and agricultural machinery, equipment with potential to cause environmental damage, equipment for extraction, manufacturing, transport or storage of hazardous substances, etc. Failure to properly deal with such risks may lead to potential legal non-compliance with local and lending institutions’ requirements, but also have negative financial and reputation consequences on the FI. The E&S due diligence of Europlan suggests that 99% of its leasing operations are new cars and only 1% equipment that potentially may pose E&S risks. Such operations are monitored for compliance with legal and regulatory requirements in effect. For equipment lease the staff of Europlan perform mandatory site visits and compliance checks. The lease agreements incorporate as standard basic environmental, and health and safety terms and conditions, including notification of occurrence of any incidents/accidents involving the leased equipment that potentially may have had impacted the environment or health and safety. The Borrower is not involved in financing goods and services above the terms stipulated in the Bank’s E&S Exclusion List. The due diligence concludes that the overall E&S risks and impacts associated with Europlan and its leasing operations are limited. No other due diligence or specific mitigation measures are considered necessary for the purpose of this operation.
Operation Leader:: Financial Institutions II
E-mail:: fi2@bstdb.org