MDM Bank and IFC Promote Energy Efficiency Investments in Russia

Moscow, July 26, 2007 — IFC, a member of the World Bank Group, today signed an advisory services agreement with MDM Bank to establish a new product that supports development of energy efficiency finance. This will include a $20 million credit line to help boost the bank’s energy efficiency lending practices. The credit line is part of a recent $100 million loan that IFC provided to the bank in June 2007.

According to the International Energy Agency, Russia’s overall energy intensity is more than six times that of Canada and 12 times that of the United Kingdom. Increasing demand for energy and rising costs are having a significant impact on profits for Russia’s industrial companies. Inefficient use of energy cuts into their profit margins and makes these companies less competitive in the global marketplace. The owners and managers have started to realize this problem, and their efforts to reduce energy consumption are opening new opportunities for the banking sector.

Russia has high potential for energy efficiency lending. To reduce electricity consumption by 10 percent, industrial enterprises need to invest about $9 billion. Energy efficiency investments are a commercially viable way for Russian enterprises to increase competitiveness and reduce their carbon footprint.

Jyrki Koskelo, IFC Director for Global Financial Markets, said, "We are pleased that one of the leading banks in Russia – MDM Bank – has recognized the opportunity for energy efficiency investments. Closing the energy efficiency gap will benefit the local economy and have a positive impact on the environment.”

Michel Perhirin, CEO and Chairman of MDM Bank Management Board, commented, “We appreciate IFC’s support, provided to MDM Bank in realization of projects of high social importance. Our cooperation helps developing such priority spheres in Russia, as mortgages, small and medium enterprises, and now energy efficiency technologies as well. This new sort of activity will allow us to expand our product range and to offer attractive programs of improving the business effectiveness to small and medium companies and private entrepreneurs."

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