32287 - CHUEE SME BOS

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Summary of Investment Information

Project Number

32287

Company Name

CHUEE Facility - Bank of Shanghai

Date SPI Disclosed

Dec 19, 2012

Country

China

Region

East Asia and the Pacific

Projected Board Date

Jan 31, 2013

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Nov 30, 2016

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Mar 12, 2013
Signed : Apr 19, 2013

Sector

Commercial Banking - SME Finance

Additional Project Attributes

Blended Finance

Project Description

IFC is in discussion with Bank of Shanghai (“BOS” or the “Bank”) to enter into an unfunded risk sharing facility (“RSF”) to support energy efficiency (“EE”) and renewable energy (“RE”) projects with small and medium enterprises (“SME”) in China (the “Project”, or “CHUEE SME BOS”). In this proposed Project, IFC would take credit risk in a loan portfolio to be originated and funded by the Bank. The Project is expected to receive support from the Global Environmental Facility (“GEF”) and Chinese Central Government.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	77.81
Loan
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Guarantee	Loans to SME Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

(i) Environmental benefit: Upon full ramp-up of CHUEE SME BOS, 132,000 tCO2 GHG emission is estimated to be reduced per year;

(ii) SME access to finance: Upon full ramp-up of CHUEE SME BOS, approximately 25 SME borrowers will be financed;

(iii) Demonstration effect: Encouraging governments to participate in future public private partnership initiatives of this type, both within and beyond China;

(iv) Capacity building: Promoting the improvement of industry-specific loan underwriting criteria and strengthening risk management practices; and

(i) With more than a decade experience in supporting EE financing globally, especially in China through CHUEE, IFC is in the leading position to continue innovation to address major market gaps for SMEs to access funding for EE and RE projects and activities;

(ii) Using global and China-specific knowledge and expertise in EE/RE financing, unique to IFC and unavailable in the local market, IFC will leverage public and private sources of capital to increase development impact;

(iii) IFC''s advisory services will be delivered through established platform which has great experience in building banks'' capacity to do EE/RE lending and SME finance;

(iv) IFC is helping partner banks to focus on SMEs, especially those in frontier regions where EE/RE funding is still at an early stage; and

(v) In the absence of IFC''s participation, it will be very difficult to raise funding for first loss and advisory services, both critical for the success of the program.

E&S Category Rationale / Risks and Mitigation

This transaction involves an unfunded RSF aimed to support small to medium energy efficiency and renewable energy loans and the overall environmental & social risk is considered to be limited. The project has therefore been categorized as FI-2 in accordance with IFC’s Environmental and Social Review Procedure. The key sectors of RSF target loans entail limited advance E&S risk and impacts that are few in number, generally site-specific, largely reversible and can be readily addressed through mitigation measures. For the project BOS will be required to screen and monitor the RSF target loans against the IFC Exclusion List, applicable Chinese E&S laws and regulations, and PSs where applicable.

The main E&S risks and impacts of the project derive from the E&S risks of the RSF target loans, the capacity and systems in place to manage these risks, and BOS’s practices with regard to labor and working conditions. At present BOS does not have an Environmental and Social Management System (ESMS) outlining the procedures, responsibilities and tools for undertaking E&S risk management of its lending activities. No staff/department has been assigned responsibility for E&S risk assessment and monitoring, and addressing the training needs of all staff involved in ESMS implementation. BOS was found to be in compliance with China relative labor laws and regulations and generally in line with the requirements of IFC Performance Standard 2 on Labor and Working conditions.

Key Mitigation Measures:

Task Description	Anticipated Completion Date
Nominate E&S Officers/Manager	On or prior to Commitment
Establish an ESMS including guidelines for its implementation	On or prior to the date the RSF is effective
Prepare ESMS Implementation Plan	On or prior to the date the RSF is effective
Complete ESMS implementation	Within 3 months after the date the RSF is effective
Provide ESMS Implementation Report	3 months after the date the RSF is effective
Review the policy for manager promotion and revise the policy if necessary	On or prior to Commitment

Contacts

For Inquiries About the Project, Contact

Name: Bank of Shanghai
Address: No.168, Yincheng Road Central, Pudong New District, Shanghai, China
Telephone: 86- 21-68475888
Fax: 86- 21-68476111
Website: http://www.bankofshanghai.com/

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Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

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To be provided by E&S specialists.

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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