33669 - WCSS Prime Bank BSLF III

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Summary of Investment Information

Project Number

33669

Company Name

PRIME BANK PLC.

Date SPI Disclosed

Apr 24, 2014

Country

Bangladesh

Region

South Asia

Projected Board Date

May 30, 2014

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Jun 6, 2014
Signed : Jun 25, 2014
Invested : Jul 25, 2014

Sector

Commercial Banking - Trade and Supply Chain

Project Description

The Project consists of providing a 1 year Short-Term Loan in the amount of up to US$20 million (for 12 months, renewable up to two times at IFC’s option for an additional 24 months, for a maximum aggregate period of up to 36 months) to Prime Bank Limited (the “Bank” or “Prime Bank”) to support the foreign currency needs of SMEs in Bangladesh.

The Bank was incorporated in February 12, 1995 and commenced its banking business with one branch on April 17, 1995 under a license issued by Bangladesh Bank. The Bank has total assets size of US$3.16 billion as of 31st December 2013. Prime Bank has an outlet network of 138 branches (including SME branches) spread across almost all of the local cities with 151 owned ATMs.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	20.0
Equity

Development Impact

Financial Market Deepening: Facilitating increased local bank access to the commercial loan market and also facilitating the access to finance for credit constrained SMEs especially to meet working capital requirements. These will deepen the depth of the financial sector.

Demonstration Effect: IFC''s proposed package signals its confidence in the Bangladesh economy and also helps increase the Bank''s credibility in international credit markets helping continued growth of its trade financing operations.

Job Creation: Bangladesh, an IDA country, still has nearly a third of its population below the poverty line in spite of improving macroeconomic fundamentals. IFC investment will further support business growth and spur indirect job creation in the SME and Export oriented segments.

Boost Export Competitiveness: The Facility will help accelerate economic growth in Bangladesh by providing SMEs and exporters with trade finance solutions to their working capital requirements and assist in payments for imports utilized.

Catalytic Role in addressing the trade and ST financing gap through a comprehensive package: IFC by bringing more local banks under the BSLF facility (STF and GTFP) will allow for an alleviation of a system wide FX liquidity constraint and provide for increased facilitation of access to the commercial loan market.

Value Added Service: Adding new local banks to the BSLF program will assist in bringing greater acceptance of IFC standards across the market.

SME Support: IFC can continue to play a leading role in implementing a comprehensive SME trade support program to promote sustainable economic growth. Complementing IFC''s efforts through GTFP, IFC will further enhance its support for SME trade in Bangladesh through the BSLF program, providing supplementary and much-needed trade working capital to SMEs. On the macro level, this will help sustain the import flows of goods required by Bangladesh. On the micro level, it will provide assistance to SMEs to better manage cash flows and assist them in being competitive in regional and global markets, supporting domestic job creation and diversifying the country''s economic base.

E&S Category Rationale / Risks and Mitigation

The project is to support an existing client for its trade finance and short-term lending operations through its Offshore Banking Unit (OBU). The on lending will primarily comprise providing working capital financing through short-term loans to importers/exporters, the majority of which are SMEs. The project presents medium E&S risks and impacts which are readily manageable. Hence, the project is categorized as Category FI-2. The E&S requirements will include IFC Exclusion List, additional list of restricted commodities and national E&S laws and regulations.

The main E&S risks and impacts of the project relate to occupation health and safety, labor and working conditions, and pollution aspects at the client’s SME borrowers’ premises. Most of these can be managed through adequate implementation of national laws and good industry practices.
The central bank of Bangladesh has provided guidelines to all banks and financial intermediaries to implement an Environmental Risk Management system. Accordingly, the bank is implementing the required framework for compliance to country E&S laws. The E&S risk management system will be required to include screening against IFC exclusion list and restricted commodity list. The bank will be required to appoint a senior officer in charge of implementing the E&S risk management system. The bank will be required to make amendments to its HR policy to comply with IFC PS-2 on labor and working conditions.

Key mitigation measures

Task Title & Description
Anticipated Completion Date
Nominate E&S officer
05/25/2014
Upgrade existing SEMS to include IFC Exclusion List, restricted commodity list and country E&S laws
06/01/2014
Upgrade HR procedures
06/01/2014

Contacts

For Inquiries About the Project, Contact

Hassanul Zahed
Senior Vice President,
International Division
Prime Bank LimitedHead Office119-120 Motijheel Commercial Area,
Dhaka 1000Mobile: +88 01713 069925Telephone: +8802 9570749, +8802 9562617Email: mailto:zahed@primebank.com.bd / mailto:zahed.primebank@gmail.com

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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.

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Task Title & Description	Anticipated Completion Date	Status	Comments	Completion Date
Nominate officers		Completed	Completed	05/08/2014
Establish SEMS		Completed	Completed	06/11/2014
Upgrade Applicable requirements		In Progress	In Progress
upgrade HR procedures		Completed	Completed	06/10/2014

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