32853 - CF RCBC Equity II

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Summary of Investment Information

Project Number

32853

Company Name

RIZAL COMMERCIAL BANKING CORPORATION

Date SPI Disclosed

Dec 17, 2012

Country

Philippines

Region

East Asia and the Pacific

Projected Board Date

Jan 17, 2013

Environmental Category

FI-1 - Significant

Status

Completed

Last Updated Date

Nov 30, 2016

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Jan 17, 2013
Signed : Feb 15, 2013
Invested : Apr 26, 2013

Sector

Commercial Banking - General

Project Description

This project comprises an investment in Rizal Commercial Banking Corporation (“RCBC” or the “Bank”), a bank in the Philippines, into which IFC, through the IFC Capitalization (Equity) Fund, LP is proposing an equity investment of up to US$100 million in the form of common shares. RCBC provides a wide range of banking and other financial products and services, including commercial and retail banking, credit cards, asset management and treasury.

IFC’s proposed investment will strengthen the Bank’s capital in anticipation of higher regulatory capital requirements of the Bangko Sentral ng Pilipinas (“BSP”) and support the Bank’s growth.

This project fits in with IFC’s strategy to support the Philippine financial markets through equity type investments in local financial institutions that play a key role in providing access to finance to underserved sectors such as SMEs and housing.

Sponsor / Cost / Location

Development Impact

(i) Continuing to strengthen the Philippine banking sector by providing long term capital, following IFC and IFC Cap Fund''s investment in BDO Unibank, Inc. in 2010 and RCBC in 2011, particularly in light of the higher capital requirements of Bangko Sentral ng Pilipinas;
(ii) Increasing access to finance to underserved segments in the Philippines such as SMEs, microenterprises, and homebuyers and women entrepreneurs, including in frontier regions outside Metro Manila;
(iii) Promoting and expanding better corporate governance and risk management practices in the Philippine banking sector; and
(iv) Contributing to the strengthening of environmental and social management practices in the country''s banking system.

IFC''s additionality comes from its leadership and unique track record in providing comprehensive financing and advisory services support to help large financial institutions transition to leaders and provide inclusive access to finance in their markets. In this project, IFC''s additionality stems from:
(i) Providing significant amounts of equity capital by mobilizing partners (e.g. through the AMC) which is otherwise not available to the Bank;
(ii) Supporting increased access to finance for SMEs and microenterprises especially in frontier regions of the country that are currently underserved; and
(iii) Using its presence in the Board of the Bank to bring best practices in the areas of corporate governance, risk management, and environmental and social management.

E&S Category Rationale / Risks and Mitigation

This transaction involves an equity investment and the overall portfolio risk is considered to be high. The project has therefore been categorized as FI-1 in accordance with IFC’s Environmental and Social Review Procedure. The Bank provides retail, SME and corporate services. The Bank’s corporate lending accounts for approximately 70% of the total portfolio while SME lending, consumer, residential mortgage and other loans account for approximately 30%. The Bank''s outstanding exposure to long term corporate loans in sectors regarded as high risk, such as real estate including development, manufacturing and electricity, gas and water, is greater than 20% of the total loan portfolio. For this project the client will be required to screen loans against the IFC Exclusion List, the national E&S laws and regulations and the IFC Performance Standards

The main E&S risks and impacts of the project derive from the E&S risks of the Bank’s lending activities, the capacity and systems in place to manage these risks, and the Bank’s practices with regard to labor and working conditions. Under the requirements of the existing IFC investment, the company has appointed an E&S officer and developed a satisfactory environmental and social management system (ESMS). The ESMS, among others, requires the Bank to screen all projects against the IFC Exclusion list, to ensure compliance with the national E&S laws and regulations and the IFC performance Standards. At present however the Bank has not yet started to implement the ESMS and therefore no E&S due diligence or other procedures are yet in place to address the risks and mitigations associated with the client’s portfolio. The Bank was found to be in compliance with the requirements of PS2 on Labor and Working conditions.

Task Description	Anticipated Completion Date
Submit a detailed implementation plan acceptable to IFC	Before Equity Subscription
Submit to IFC evidence of the approved bank's revised credit policy which, among others, shall incorporate key provisions of the ESMS.	Before Equity Subscription
Full implementation of the SEMS	Within 6 months of subscription
Provide ESMS Implementation Report	Within 6 months of subscription

Contacts

For Inquiries About the Project, Contact

Eduardo Martinez-Miranda
International Finance Corporation
11/F Tower One, Ayala Triangle
Ayala Avenue, Makati 1226
Philippines
+632 848-7333

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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.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

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.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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