Project Description

The provision of a senior loan of up to US$ 8 million  (€ 7.5 million) in KZT equivalent, as determined at the time of disbursement, to Shinhan Bank Kazakhstan (“SBK”) – a mid-sized Kazakhstan bank 100 per cent owned by Shinhan Bank Co. Ltd., South Korea (Parent bank).

The loan will be provided in two equal tranches under the Youth in Business Programme for Central Asia (YiB CA, “the programme”), which will be rolled into a blended finance programme under the Financial intermediaries Framework (“FIF”). The loan will be fully guaranteed by the Parent bank.

Transition Impact

71 (FW)

The proposed project will be the second sub-operation in Kazakhstan under the YiB CA, contributing to the Programme’s objectives and support its Inclusive (Primary) and Competitive (Secondary) qualities. The project is expected to increase lending to Youth MSMEs, facilitate SBK capacity building and promote the transfer of skills to young business owners/managers in the country.

Client Information

SHINHAN BANK KAZAKHSTAN JSC

EBRD Finance Summary

USD 8,000,000.00

Total Project Cost

USD 8,000,000.00

Additionality

Financing structure: additionality of the loan is expected to stem from provision of the local currency medium-term financing to SBK. Such funding remains limited in the local market.

Innovative financing structures and/or instruments: The project will benefit from a First Loss Risk Cover (FLRC) and a Result Based Compensation (RBC), which is a tailor-made and innovative instrument in the Central Asian market.

Standard setting: through a combination of elements (financing; FLRC; RBC; and TC), the Programme will help SBK to raise its inclusive financing standards by generating a better awareness and understanding of the needs of the underserved segment of young entrepreneurs. The comprehensive TC package will support SBK in adapting its products and delivery mechanisms to better suit the needs of young entrepreneurs, thus allowing it to use the potential of the segment and accelerating its financial inclusion.

Gender SMART: The persistent gender gaps in youth entrepreneurship in Kazakhstan will be addressed through dedicated TC to SBK that will help develop a gender-responsive approach to youth-focused lending, thereby ensuring that youth outreach is designed for both young women and men.

Knowledge, innovation and capacity building: SBK will benefit from the Programme’s extensive capacity building, comprising training, advisory support to SBK as well as to youth MSMEs through ASB activities, allowing all parties to access and benefit from knowledge and expertise that may not be present in the local market. A strong focus on digital delivery will maximise outreach and improve accessibility of services in the regions outside of capital cities, making the products attractive to young entrepreneurs and micro-companies.

Technical Cooperation and Grant Financing

A. Technical Cooperation (TC).

The YiB CA TC Programme includes two linked TC components:

(i) Tailored capacity-building for PFIs. Funding source: SSF. Amount/currency: EUR 1.2m for the pilot stage of the Programme.

(ii) Capacity-building for youth MSMEs via the ASB. Funding source: SSF, Small Business Impact Fund, the Government of Kazakhstan. Amount/currency: EUR 1.5m for the pilot stage of the Programme.

B. Co-investment grants / Concessional Finance (Non-TC) The project involves:

(i) First Loss Risk Cover (“FRLC”) of up to 7 per cent of the YiB loan (limited to 70 per cent per a single sub-loan); the FRLC will compensate for credit losses of SBK, if any, as a result of its participation in the YiB CA.

(ii) Result-based Compensation (“RBC”) of up to 3 per cent of the proposed YiB Loan; the RBC is expected to partially compensate SBK for the up-front investments related to building the necessary infrastructure for a sustainable YiB lending expansion.

Funding source: SSF. Amount/currency: US$ 800,000 in total (or 10 per cent of the proposed YiB loan). Funding status: Confirmed.

Implementation summary

PSD last updated

04 Dec 2023

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

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Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD’s Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank’s countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.