34860 - Davivienda TII

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Summary of Investment Information

Project Number

34860

Company Name

BANCO DAVIVIENDA S A

Date SPI Disclosed

May 30, 2014

Country

Colombia

Region

Latin America and the Caribbean

Projected Board Date

Jun 30, 2014

Environmental Category

FI-1 - Significant

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Jul 1, 2014
Signed : Jul 18, 2014
Invested : Jul 31, 2014

Sector

Commercial Banking - General

Project Description

The project consists of a potential subordinated loan of up to US$172.5 million to Banco Davivienda S.A. in Colombia (“Davivienda”) with the purpose of strengthening its capital structure, to be subscribed in part or in whole by IFC and the IFC Capitalization (Subordinated Debt) Fund.

Sponsor / Cost / Location

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

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

Development Impact

- The Project would support a systemic bank in Colombia and Central America in order to meet the growing financial needs of the local economies. Supporting a bank with regional operations such as Davivienda is especially important as it is expected to diminish the volatility present in developing financial markets, creating therefore a positive demonstration effect.
- The Project would enhance Davivienda''s ability to support small and medium enterprises in Colombia, which will in turn stimulate growth, employment generation and poverty reduction in the country.
- Creating a demonstration effect for other financial institutions in Colombia by bringing best practices in environmental and social management systems

- IFC will be supporting a systemic bank with a significant role to play in Colombia and Central America by providing long term Tier II Capital to strengthen its capital base.
- IFC would continue to support a strategic partner in the region, present in many areas of relevant importance for IFC (ie., mortgage, SME finance, infrastructure finance, etc).
- This Project is expected to mobilize resources from the SDF, with IFC playing its catalytic role, allowing Davivienda to get more resources from a new group of investors through the Fund''s limited parties.
- Environmental and Social Standards Implementation: IFC would continue to support the Davivienda''s risk management framework in terms of environmental and social risks.

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 proposed project consists of a non-convertible subordinated loan to strengthen Davivienda Colombia’s capital structure. Given that the Davivienda’s portfolio includes substantial financial exposure to activities that have potential significant adverse E&S risks, such as oil and gas, mining, energy generation and distribution, infrastructure, construction and agribusiness, this project has been classified as Category FI-1 according to IFC''s Sustainability Policy.

Under existing projects with Davivienda in Colombia (Davivienda EQ, #25520, and Davivienda MTSF, #24282), the bank implemented an E&S Management System (ESMS) to apply the IFC Exclusion List, the applicable E&S laws and regulations and the IFC Performance Standards. Under this project, IFC will monitor the implementation of the E&S framework in all subsidiaries.

The potential E&S risks and impacts of this project are related to Davivienda''s lending activities in Colombia and its ability to manage E&S risks and impacts related to its clients, particularly those involved in sectors with significant potential risks such as those mentioned above. Potential E&S risks associated with these sectors revolve around occupational, health and safety aspects, pollution control, biodiversity impacts, and impacts on indigenous peoples and other vulnerable communities. Davivienda has developed and implemented a comprehensive system to identify, manage and avoid these E&S risks for its corporate and project finance lending. As of April, 2014, it has started to also assess and manage the E&S risks of its SME lending and is currently in the process of implementing its E&S Management System in its subsidiaries in Central America. While the proceeds of this project will be used in Colombia, IFC will monitor the implementation of Davivienda’s ESMS in all of the bank’s subsidiaries and require that they are also aligned with IFC''s E&S requirements as part of this project. Davivienda is currently in compliance with the IFC requirements on life and fire safety and labor and working conditions.

Key Mitigation measures

Type of Action
Timeframe
SME E&S Framework Implementation Report
Within 3 months of disbursement
Performance Standards Training for E&S Staff
Within 3 months of first disbursement
ESMS enhancement and implementation report for all subsidiaries
Within 6 months of disbursement

Contacts

For Inquiries About the Project, Contact

Elizabeth Uribe
Investors Relation Officer
Tel: (571) 3300000 ext. 53670
Bogota, Colombia

For Inquiries and Comments About IFC, Contact

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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.

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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.

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Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
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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.

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Type of Action	Timeframe
SME E&S Framework Implementation Report	Within 3 months of disbursement
Performance Standards Training for E&S Staff	Within 3 months of first disbursement
ESMS enhancement and implementation report for all subsidiaries	Within 6 months of disbursement

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