33226 - Daycoval Debt

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Summary of Investment Information

Project Number

33226

Company Name

Banco Daycoval S/A.

Date SPI Disclosed

Mar 5, 2013

Country

Brazil

Region

Latin America and the Caribbean

Projected Board Date

Apr 5, 2013

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : May 8, 2013
Signed : Jul 16, 2013
Invested : Jul 25, 2013

Sector

Commercial Banking - SME Finance

Project Description

This project consists of an A loan of up to US$50 million and a B Loan of up to US$150 million to Banco Daycoval (“Daycoval” or the “Bank”), a mid-sized bank in Brazil and an existing IFC client.

The A Loan proceeds will be used to finance small and medium enterprises (“SMEs”) located in the frontier regions of Brazil, helping to expand access to finance for SMEs in regions of the country that are underserved by the Brazilian banking system. The B loan proceeds will be channeled to SMEs located throughout Brazil and will allow IFC to leverage its own funds, creating a larger development impact in the fast growing, but still underserved Brazilian SME market.

IFC’s definition of frontier regions in Brazil encompasses all the states located in the north and northeast, the mid-west – with the exception of the Federal District – and the western half of the state of Minas Gerais.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
Equity

Development Impact

The Project will increase access to finance to SMEs, at the same time that it fosters a competitive environment in the Brazilian banking sector. It will also help the Bank maintain and expand its lending to SMEs in the frontier regions of Brazil. Finally, the Bank will be required to enhance its management of environmental and social risks through improvement of capacity and training.

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 transaction involves the support to Daycoval to enlarge its presence on SMEs located in frontier regions of Brazil (A Loan) and to the Brazilian market as a whole (B Loan). Over 38% of its SME portfolio, as of December 2012, is concentrated in commerce (23.3%), services (7.7%) and transportation services (7.5%) sectors. Medium E&S risk sectors accounted for 29%: agribusiness (11.7%) chemicals (4.7%), construction and real estate (6.5%) and manufacturing (6.1%). Longer term operations are restricted to the personal banking (41% of loans).

The main E&S risks and impacts related to the Project derive both from the bank’s capacity to continue implementing existing procedures to manage E&S risks as well as to maintain practices with regard to labor and working conditions. Daycoval’s key portfolio E&S risks are related to lending to higher E&S risks sector SMEs, such agribusiness, chemicals, construction and manufacturing. As an existing client, the Bank has developed and implemented an ESMS with requirements compatible to the portfolio of the proposed project. As part of the new investments, the client will be required to improve implementation practices, developing and rolling out a training program, involving all departments responsible for risk management

Contacts

For Inquiries About the Project, Contact

Ricardo Gelbaum
IR Officer
Banco Daycoval, S.A.
Avenida Paulista, 1793, 01311-200, São Paulo, Brazil
Tel: +55 (11) 3138-1024
Fax: +55 (11) 3138-0664
Email: mailto:Ricardo.gelbaum@bancodaycoval.com.br

For Inquiries and Comments About IFC, Contact

General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

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.

Task Description	Anticipated Completion Date
Implement Staff Training	Within six months of disbursement

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