35053 - WCSS BRAC II

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Summary of Investment Information

Project Number

35053

Company Name

BRAC BANK LIMITED

Date SPI Disclosed

Apr 18, 2014

Country

Bangladesh

Region

South Asia

Projected Board Date

May 29, 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 20, 2014
Signed : Aug 14, 2014
Invested : Sep 3, 2014

Sector

Commercial Banking - Trade and Supply Chain

Project Description

The Project consists of providing a 1 year short-term loan for the amount of up to US$40 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 BRAC Bank Limited (the “Bank” or “BRAC Bank”) to support the foreign currency needs of SMEs in Bangladesh. The financing provided is a fit with the World Bank and IFC strategy of promoting economic growth by providing access to finance to underserved market segments and promoting international trade, thereby leading to improved competitiveness, job retention and creation.

BRAC Bank was established in 2001 and has assets of US$2.38 billion as of 31st December 2013.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	40.0
Equity

Development Impact

Improved access to credit: The Project will increase access to finance for credit constrained SMEs, especially to meet working capital requirements. It will also expand financial intermediation.

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, aiding 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''s 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.

Fill FX liquidity gap: IFC, by bringing more local banks under the BSLF facilities (WCSS), is uniquely positioned to intervene sector-wide with FX liquidity and trade solutions to finance the working capital needs of importers and exporters in Bangladesh, an IDA and trade-dependent country. With IFC''s intervention, the Bank will have more US dollar resources to provide access to finance to underserved market segments and promote international trade.

Other Value Added Service (SME Support): IFC continues to play a leading role in implementing a comprehensive SME trade support program to promote sustainable economic growth.
Through WCSS, IFC will further enhance its support by providing supplementary and much-needed trade working capital to SMEs. On the macro level, this will help sustain both 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

E&S Categorization Rational: 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.

Main Environmental and social risks and impacts of the project: The main E&S risks and impacts of the project relate to occupation health and safety, labour and working conditions, and pollution aspects at the client’s SME borrower’s 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 client is implementing the required framework for compliance to country E&S laws. The E&S risk management system also incorporates screening against IFC exclusion list and restricted commodity list. The client has appointed a senior officer as in charge of implementing the E&S risk management system. The client is also in compliance with IFC PS-2 on labour and working conditions

Key Mitigation Measures: None

Contacts

For Inquiries About the Project, Contact

Syed Golam MarufHead of Corporate Institutions &
Structured FinanceBrac Bank LtdHead OfficeBashati Aristocrats, 1st Floor, Plot: 6Gulshan Avenue, Dhaka-1212Mobile: +88 01713066851Telephone: +880 (2) 9863269Email: mailto:sg.maruf@bracbank.com

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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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