35007 - BBVA PY CL II

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Summary of Investment Information

Project Number

35007

Company Name

BANCO GNB PARAGUAY S.A.

Date SPI Disclosed

Apr 29, 2014

Country

Paraguay

Region

Latin America and the Caribbean

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 : May 29, 2014
Signed : May 30, 2014
Invested : Nov 5, 2014

Sector

Commercial Banking - SME Finance

Project Description

The proposed project consists of a 5-year loan for US$40 million to be provided by IFC to BBVA Paraguay (“BBVA PY” or "the Bank") to support its lending activities to export oriented small and medium enterprises (“SMEs”), and an additional US$20 million loan under IFC’s Managed Co-Lending Portfolio Program (the “MCPP Loan”) under the same terms and conditions (the “Project”).
IFC has a strong relationship with BBVA PY, having completed three projects since March 2009. The Bank is the fourth largest financial institution in Paraguay, targeting the Corporate, SME and retail segments. It has a total of 24 branches throughout Paraguay and employs about 490 persons.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	40.0
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
Straight Senior Loan	Loans to SME Borrowers

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

Development Impact

- The Project will allow BBVA PY to enhance access to funding with longer maturities to SMEs, enabling them to undertake capital investments at longer tenors and attractive costs;
- The facility will be 100% used to provide small sub loans with an average size of US$1 million to Paraguayan SMEs. On a sector level, the introduction of longer-term financing in the market will supply more funding options to SMEs, generating a range of social and economic benefits which include promoting economic growth and raising productivity;
- IFC''s new project with BBVA PY will be a follow-on investment to project #28787, the first long-term loan ever granted to a Paraguayan banking institution by IFC. Leveraging on the success of the first long-term transaction, IFC''s continuous stamp of approval will serve as an additional indicator to private investors on the possibilities presented by the local financial system.

IFC''s additionality arises as a consequence of the following factors:
- Support the growth of BBVA PY: IFC will be supporting the growth of a well-run bank, playing an increasingly active role in providing longer-term funding to those productive sectors of Paraguay which constitute a key driver of the economic growth of the country.
- IFC will mobilize funding through its Managed Co-Lending Portfolio Program to provide additional financing to the Bank.
- This investment will consolidate the demonstration effect initiated with the long-term debt investment completed by IFC with the Bank back in 2010, and will also strengthen IFC''s endorsement regarding Paraguayan risk and thereby enhancing investor confidence in the Country.

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 a Category FI-2 project, according to IFC’s E&S policies. It involves a US$40 million loan to support export oriented SMEs and an additional US$20 million loan under IFC’s MCPP under the same terms and conditions. BBVA Paraguay concentrates its operation in Agribusiness (48%) and Commerce (20%). The Key E&S risks are associated with the Bank’s exposure to agribusiness sector in low to medium risk activities such as small scale crop production and animal husbandry supply chains, including commerce of agri implements. E&S concerns include impacts on environmentally sensitive natural areas (Chaco), indigenous people, as well as appropriate use of pesticides, in addition to the support to agri processing facilities such as slaughter houses and meat processing plants with weak E&S practices.

The Project’s key E&S risks and impacts derive from the Bank’s capacity to implement a management system able to identify and manage the environmental and social risks associated to its support to subprojects for export oriented SME clients. Potential pipeline shall involve low to medium E&S risks activities. Currently the Bank counts with an ESMS and the required E&S capacity to implement it.Additional 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. BBVA Paraguay''s HR as well as its life, fire and safety policies, procedures and practices are in line with IFC’s Performance Standard 2: Labor and Working Conditions.

Contacts

For Inquiries About the Project, Contact

BBVA Paraguay S.A.
Mcal. López c/Torreani Viera
Tel: +595-21-417-6000
http://www.bbva.com.py/

For Inquiries and Comments About IFC, Contact

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Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

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Task Title & Description	Anticipated Completion Date
Extend implementation of applicable requirements i.e. the Paraguayan Environmental and Social Laws and Regulations, the IFC Exclusion list and the Paraguayan Chaco controlled area for new land conversions, to export oriented SMEs.	On or prior to Disbursement

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