32916 - CF Amalia sub-debt Colombia

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Summary of Investment Information

Project Number

32916

Company Name

ITAU COLOMBIA SA

Date SPI Disclosed

Jul 9, 2013

Country

Colombia

Region

Latin America and the Caribbean

Projected Board Date

Sep 5, 2013

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Apr 20, 2024

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Sep 27, 2013
Signed : Dec 31, 2013
Invested : Mar 17, 2014

Sector

Commercial Banking - General

Project Description

The project involves a Subordinated Bond issued by Banco Corpbanca Colombia S.A. (the “Bank”) to be subscribed in part or in whole by IFC and the IFC Capitalization Fund, LP. The purpose of the proposed investment is to support the Bank’s growth plans in Colombia.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	42.50
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
Quasi-Equity	Loans to SME Borrowers
Quasi-Equity	Loans to SME Borrowers

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

Development Impact

The development impact of IFC''s investment in this Project is expected to be high given that:
- The Project would enable greater cross-border financial integration in LAC, as it would assist the Bank to consolidate its presence in a new market. By becoming a regional player and a systemic bank in the Country, the Bank and its Sponsor would be (a) promoting commercial trade between two or more countries; b) supporting the increasing trend of companies setting operations and expanding regionally, and (c) improving institutions and investment climate through higher ESG standards.
- The proposed transaction would support the creation of a financial services platform with deep roots in LAC. This is expected to diminish the volatility derived from large international investors entering and exiting developing markets. Clients will gain additional confidence in the banking system leading to overall increased economic stability.
- One of the Bank''s strategic objectives is to continue focusing on the SME business, as the majority''s of the Country''s total SMEs lack adequate access to bank financing.

IFC''s expected additionality and role can be summarized as follows:
- IFC would provide long term Tier II funding to support the Bank''s expansion plans at a time when fund raising from new investors is challenging given the economic turmoil in developed markets.
- IFC would be supporting one of the largest, recent South-South investment strategies by a local sponsor in Latin America that would contribute to the further development if the Country''s financial sector, foster additional competition and ultimately increase access to financing for local SMEs and other underserved segments of the market.
- IFC''s stamp of approval is very relevant in the Latin American markets where the Bank is expanding. Through this investment IFC would play the role of validating the conversion into a systemic bank in the Country and would signal strong support to an emerging market sponsor.
- The combined partnership of IFC and the Bank, is expected to result in the introduction of new and innovative financial products in the Country. IFC''s footprint of offices worldwide, its global network of clients and relationships, knowledge base of industrial sectors, project finance skills, and record of financial and capital markets innovation, make it an ideal partner for the Bank''s Sponsor as it expands its business in Latin America.
- Mobilization. This project is expected to mobilize resources from the AMC''s Subordinated Debt Fund, with IFC playing its catalytic role, allowing the Bank to get additional resources to become a systemic bank in the Country.

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. It involves an IFC investment in a commercial bank that concentrates its operation in retail (39%) and middle market clients (27%) presenting a 44% to project/corporate finance. The majority of lending provided is to medium to low risk E&S sectors, with a limited exposure to sectors with potentially higher E&S risk such as infrastructure projects and corporate loans in construction, utilities, manufacturing, mining and fishing sectors.

The key risks and impacts derive from the Bank’s capacity to implement a robust management system able to identify and manage the potential environmental and social risks associated to its support to sub-projects in potentially higher E&S risks. Currently the Bank does not count with an ESMS and the required E&S capacity to implement. Additionally, E&S risks and impacts of the Project derive from the Bank''s capacity to maintain good practices with regards to labor and working conditions.

Key Mitigation measures:

Task Description
Anticipated Completion Date
Nominate Officers
On or Prior to Commitment
Development of an E&S Policy
On or prior to Subscription
Establish an enhanced ESMS including guidelines for the implementation as well as capacity building program
On or prior to Subscription
ESMS Implementation and Staff training
Six months after Subscription
Enhance HR Policy in line with PS2 Requirements
Six months after Subscription

Contacts

For Inquiries About the Project, Contact

Javier Barrenechea
Cra. 7 N° 99-53, piso 18, Bogota, Colombia
Tel: 57 1 6448362

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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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Task Title & Description	Anticipated Completion Date
Nominate officers	11/13/2013
Establish SEMS
Formalize procedures
Develop guidelines
Staff Training
Retrenchment Policy

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