32605 - BI Gender Incl

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Summary of Investment Information

Project Number

32605

Company Name

BANCO INDUSTRIAL DO BRASIL S.A.

Date SPI Disclosed

Nov 8, 2012

Country

Brazil

Region

Latin America and the Caribbean

Projected Board Date

Dec 10, 2012

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Dec 14, 2012
Signed : Mar 10, 2014
Invested : Mar 13, 2014

Sector

Commercial Banking - General

Project Description

BI-Gender Inclusion (Project # 32605), consists of an A/B syndicated loan of up to US$ 65 Million to Banco Industrial do Brazil (“BIB”, “Banco Industrial” or the “Bank”), a midsized SME bank in Brazil, and an existing IFC client.

The above loan will support BIB’s lending operations to the SMEs, with at least 50 percent of the total funds earmarked to funding women-owned businesses. Therefore, the above Project will assist BIB to promote financial inclusion of women entrepreneurs in Brazil. The Project would include eligibility criteria on the use of proceeds related to the profile of the sub-borrowers (women entrepreneurs), as similarly done in other IFC projects in Brazil.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	15.0
Equity

Development Impact

The expected development impacts of this project are:
i) The key development objective of this project is to increase financial inclusion for SMEs in Brazil with a special focus on women-owned business ( at least 50 % of the project amount will be used to on-lend to women-owned SMEs ).
ii) This project is intended to have a demonstration effect of the business opportunity presented by women entrepreneurs as an under-served market in Brazil.
iii) Foster competitive environment in the Brazilian banking sector.

Furthermore, given that the project targets financial inclusion which gives people the opportunity to escape poverty and improve their lives. Furthermore, World Bank Group research shows that focusing on access to finance for female entrepreneurs has the following benefits:
a) Increasing opportunities for women entrepreneurs is key if the global economy is to have sustained and more equitable growth
b) Women entrepreneurs create jobs that are more likely to employ other women
c) Women are more likely than to men to contribute additional income to household poverty reduction and improved nutrition and schooling for their children; and
d) Giving women entrepreneurs access to credit and increasing their economic power will translate into improve livelihoods for a wide cross-section of society.

The Project is expected to create the following benefits:
i) The senior loan facility would have a target of at least 50% for on lending to women owned SMEs, thereby enabling the Bank to increase the reach to this underserved market, with the remaining funds financing SMEs in general;
ii) With the proposed project, Industrial would promote women-owned enterprises as a separate sub-segment with the SME space.
iii) Access to International Banking Markets: without the Project, Industrial would not be able to raise 2 to 3 year funding from international financial institutions in the current market conditions. In volatile moments such as the current one, IFC''s stamp of approval and preferred creditor status are critical elements to attract international lenders.

Indicator	Metrics	Comments	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
CORE - E and S Management Systems (Y/N)	Compliance/Enhancement		Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

The Project has been classified as Category FI-2, according to the IFC''s Environmental and Social Review Procedures. The proposed project involves the support to Banco Industrial do Brasil''s SME financing with the funds being guided to local sub-clients, 50% of which should be women-owned businesses and sub-loans under USD 2 million. The Bank’s focuses its operations in short term financing (over 91% of the bank''s portfolio) with overall SME portfolio presenting limited adverse E&S risk. As part of the proposed investment, BIB will be required to extend implementation of ESMS to screen all SME sub-projects against the IFC Exclusion List and the Brazilian E&S laws and regulations, in addition to upgrade some Human Resources practices in line with PS2 requirements.

The main E&S risks and impacts related to the Project derive both from the bank’s capacity to maintain the required procedures to manage E&S risks as well as to maintain practices with regard to labor and working conditions. As an existing client, the Bank has implemented an Environmental and Social Management System that as part of the proposed investment will be upgraded. SME loans account for over 51% of BIB portfolio, with transaction size averaging USD 450 thousand and tenor of 9.8 months. BIB focus majorly in services and retail clients (61%), in addition to manufacturing, most specifically suppliers of highest growing sectors in the local economy such as Auto industry, Construction & Engineering and large retailers mostly in the food and beverage segment (39%).

Contacts

For Inquiries About the Project, Contact

Eduardo Barcelos Guimarães
CFO-RI
Banco Industrial do Brasil S.A
Av. Pres. Juscelino Kubitschek, 1703, 3º Andar- 0453-901, São Paulo-SP, Brasil
Tel: +55 11 3049-9772/ 3049-9774
Fax:+55 11 3049-9832
Email: Guimarães@bancoindustrial.com.br

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Task Description	Anticipated Completion Date
Extend E&S requirements to the entire SME asset class	On or Prior to disbursement
Formalize procedures and guidelines for promotions and salary increases.	On or Prior to disbursement
Implement E&S Staff Training	At all times

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