33155 - Vision CL PYG

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Summary of Investment Information

Project Number

33155

Company Name

VISION BANCO S.A.E.C.A.

Date SPI Disclosed

May 3, 2013

Country

Paraguay

Region

Latin America and the Caribbean

Projected Board Date

Jun 4, 2013

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Jun 6, 2013
Signed : Aug 16, 2013
Invested : Dec 18, 2013

Sector

Commercial Banking - Microfinance

Project Description

The proposed project (the “Project”) consists of a 5-year Guarani-denominated A-Loan for an equivalent of up to US$15 million to Vision Banco S.A.E.C.A. (the “Bank”, “VB” or “Vision”). The Project, which will increase access to finance for micro, small and medium enterprises, will be sourced through IFC’s Master Swap Agreement with the Central Bank of Paraguay.

VB was created in 1992 as a financial company, and was transformed into a bank in January 2008. The Bank mainly targets MSMEs and has become a leading microfinance institution. Vision has an extensive commercial network of 89 branches with national coverage and has over 318,000 customers. VB is ranked 5th out of 16 banks in terms of assets in the financial system.

Sponsor / Cost / Location

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

Development Impact

- Enhance access to finance for MSMEs. The Project will allow the Bank to provide its clients access to funding in Guaranies with longer maturities, enabling them to undertake investment projects with more appropriate financing structures;

- Generate a demonstration effect. The Project is expected to create a demonstration effect for other banks by increasing the level of sophistication of the Paraguayan financial system and the BCP, through the greater use of cross-currency swaps, further enhancing IFC's developmental impact in Paraguay; and

- Help expand Paraguay's financial sector. By increasing access to finance for low-income groups and other priority sectors such as MSMEs.

- Local currency funding. Through the Master Swap Agreement signed with the Central Bank of Paraguay, IFC can provide local currency funding to Vision Banco, consequently reaching to its MSME clients, who have business in the local market and generate earnings in Guaranies;

- Longer tenors in local currency. IFC will provide longer-term funding in local currency, which is scarce in the market for MSMEs which play a key role within the Paraguayan economy;

- Demonstration Effect. IFC will support the development of Paraguay's financial sector in an innovative manner, by promoting local-currency lending and therefore maximizing the use of its limited resources. The Project will constitute IFC's second-ever debt investment in local currency done in Paraguay. This will consolidate the demonstration effect initiated with the prior long-term debt investments in U.S. dollars, sending a positive signal to the market regarding Paraguayan risk and thereby enhancing investor confidence in the country;

- Market Knowledge. IFC can share its global microfinance knowledge, regional network and best practices with the Bank and at the same time provide regional comparators and benchmarks;

- Liquidity and Foreign Exchange Risk Management. The Project will allow the Bank to diversify its funding base and improve its liquidity and foreign exchange risk profile.

Indicator	Metrics	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
Access to Finance: Outstanding SME Portfolio (#)	Outstanding Portfolio (#)	Not Available	Not Available	Not Available
Access to Finance: Outstanding SME Portfolio ($)	Outstanding Portfolio ($)	Not Available	Not Available	Not Available
Access to Finance: Outstanding Microfinance Portfolio (#)	Outstanding Portfolio (#)	Not Available	Not Available	Not Available
Access to Finance: Outstanding Microfinance Portfolio ($)	Outstanding Portfolio ($)	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 Vision Banco to enhance access to finance for MSMEs. Potential portfolio includes the support to activities of medium E&S risk including agribusiness (retail of supplies, processing, small plantation and cattle raisers), manufacture (food processing, clothes and electronic assembling), and construction (services providers and contractors). MSME operations represent 77% of VB’s portfolio. As part of the proposed investment, Vision Banco will be required to develop an ESMS to screen MSME sub-projects against the Paraguayan Environmental and Social legislation, the IFC Exclusion List and Chaco excluded areas for land conversion. The system should guarantee close monitoring of key risks and development action plans reflected in legal documentation where appropriate.

The main E&S risks and impacts related to the Project derive both from the Bank’s capacity to develop, implement and maintain an ESMS to manage E&S risks as well as to maintain practices with regard to labor and working conditions. VB does not count with a formal E&S management; however the Bank has internal capacity for its development and implementation. Vision already screens activities against the IFC Exclusion List in line with a previously evaluated equity investment project. Commitment for this screening is detailed in its Credit Policy Manual. Risk Management procedures include legal compliance screening. Vision Banco’s HR policies, procedures and practices are in line with IFC’s Performance Standard 2: Labor and Working Conditions. Key impacts may include poor land use and labor practices associated with VB’s exposure to medium E&S risk sectors such as agribusiness and construction. Potential portfolio of proposed sub-projects includes the support to those activities.

Contacts

For Inquiries About the Project, Contact

Vision Banco S.A.E.C.A.
Av. Santa Teresa 3088 c/Consejal Vargas
Tel: +595-21-414-3000
http://www.visionbanco.com

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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.

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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 Description*	*Anticipated Completion Date*
Nominate Environment and Social Officer	On or prior to Commitment
Develop an E&S Policy including implementation and training plan	On or prior to Disbursement
Establish an ESMS including guidelines for the implementation	Within 6 months of Disbursement
Implement training program to all relevant staff	Within 6 months of Disbursement

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