China Development Bank provides $30 million to Ipoteka Bank for on-lending purposes

Project narrative

On July 26, 2017, China Development Bank and Ipoteka Bank -- a state-owned bank in Uzbekistan -- signed a $30 million loan agreement. The agreement was amended for an unknown purpose on October 22, 2019. The loan carried an 8-year maturity and an interest rate of 6-month LIBOR plus a 4% margin. The proceeds of the loan were to be used by the borrower to develop small businesses, promote private entrepreneurship, and to purchase modern equipment and tools. Repayments were to made semi-annually by the borrower. The (principal) amount outstanding was UZS 52,106,489,000 as of December 31, 2017 and UZS 654,839,000,000 as of December 31, 2020. There are some indications that the China Development Bank loan to Ipoteka Bank may have financially underperformed vis-a-vis the original expectations of the lender. In June 2023, Ipoteka Bank was not in compliance with different obligations under multiple different facility agreements with China Development Bank. Specifically, financial covenants were prepared using Uzbek Generally Accepted Accounting Principles (GAAP) rather than the required International Financial Reporting Standards (IFRS). This breach of agreement resulted in loan repayment acceleration right for CDB. Ipoteka does not expect this non-compliance to impact the financial performance of the bank.