MDM A+B Loan MDM Bank (MDM or the Bank) is one of Russias largest private universal banks ranked 11th in the country by asset size as of September 2007 and operating 172 outlets across Russia with a network of 122 sales offices in the regions (excluding Moscow and Moscow region) as of 23 March 2008.  MDM Bank is the parent company and the lead operating entity of the MDM Group (the Group) accounting for 86% of the Groups assets.  The Group operates a total of two banks, one bank in the Russian Federation (MDM Bank, headquartered in Moscow) and one in Latvia (Latvian Trade Bank).  The Group also owns and operates securities trading and asset management companies and a leasing company.   MDM was established in 1993.  Since then it evolved from being a mostly trading institution servicing its shareholders into a universal bank offering a full range of financial services to clients, including: corporate banking, retail banking, investment banking & financial markets, private banking and asset management.  Importantly, the Bank has a clear business model based on financial intermediation between non-related parties (as of 31 December 2007, on and off balance sheet exposure to related parties was approximately 0.1% of total assets).  In 2006 MDM Bank adopted a new strategy focused on expansion into retail and small business banking along with the development of regional branch network.  This strategy was updated in 2007 for the period 2008-2012 in response to changes in the competitive landscape and global financial markets and with input from the Banks new strategic minority shareholders, who joined during 2007.  While Corporate and Investment Banking remain the primary sources of revenue and are a core element of the Banks long-term business strategy, retail banking is one of the key strategic businesses for the Bank and the strongest value driver.  Small business banking was launched in late 2005 and today the Bank is a top six player in the sector by loan portfolio size.  In December 2007 MDM with the support from IFC launched a new energy efficiency loan product.   The Bank is rated by international rating agencies, with BB rating from Standard & Poors, BB rating from Fitch Ratings, and Ba1/NP/D+ rating from Moodys.  The Bank is also the only Russian financial organization that has been given a public corporate governance rating by Standard & Poors.  In February 2008 Standard & Poors confirmed the overall Corporate Governance Score at 6+.  The rating comprises four components:   - ownership structure and external influence;  - shareholders rights and stakeholder relations;  - transparency, disclosure and audit; and  - board structure and effectiveness. This project represents an effort by IFC to strengthen and leverage an effective strategic relationship with MDM Bank in order to use its nation-wide distribution network to deliver energy efficiency financing to the Russian market.  In July 2007, MDM signed an Energy Efficiency Advisory Agreement with IFC and allocated $20 million from the previously provided IFCs $100 million credit line to energy efficiency loans specifically for SMEs.  In December 2007 the energy efficiency product was officially launched by the Bank and today energy efficiency financing is available for SMEs in 47 Russian cities.  IFCs A loan under this project is aimed at helping MDM Bank to expand its energy efficiency financing to this broader segment of businesses in Russia.   Energy prices are increasing rapidly in Russia.  However, many industrial companies are still using energy-intensive equipment that was installed more than 20 years ago  nearly 48% of production assets in Russia date from before 1985.  Company managers take an overly conservative view when it comes to assessing energy efficiency potential.  Financial institutions, on the other side, are reluctant to finance energy efficiency loans due to the higher perceived risk and longer-term financing requirements.  IFCs investments complemented with dedicated technical assistance will enable the Bank to provide long-term energy efficiency loans at attractive rates.  Lower energy cost will improve companies cash flows and increase their competitiveness.  The increased modernization level of the companies will support a sustainable growth of the economy.  Also, the reduction in the energy consumption will translate into CO2 emission reduction while maintaining the same level of economic output, which in its course, will decrease the greenhouse effect and contribute to the slowing down of the climate change.   A major Russian private bank with presence across the country, MDM has a significant influence on the stability of the Russian banking sector and economy overall.  The B Loan will help expand the access of MDM to the syndicated loan markets for larger amounts than is currently available and sustain the business expansion of the Bank.  The project is an important component of IFC''s response to the financing constraints faced by Russian banks as a result of the ongoing credit crunch in the international markets.