NIC Bank Limited (“NIC Bank”) was established in 1959 as a non-bank financial institution to provide hire purchase and installment credit facilities in Kenya. It became a publicly listed company on the Nairobi Securities Exchange (NSE) in 1971. In 1995 it converted to a bank and later merged with African Mercantile Bank Limited in 1997. In 2007, NIC Bank repositioned itself as a ‘One Stop Shop’ financial services supermarket. NIC is the 8th largest bank in Kenya with a market share of 4.17%.

NIC Bank is a publicly listed company on the Nairobi Securities Exchange and has over 25,000 shareholders. The key shareholders of the Bank are First Chartered Securities Ltd with a 15.84% stake, ICEA Asset Management Limited A/C 2000 with 9.16%, Livingstone Registrars Limited with 8.62% and Rivel Kenya Limited with 8.29%.

The proposed project is to provide a US$ 25 million senior loan and a US$ 30 million subordinated loan to NIC Bank.

55.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	55.0
Equity

* These investment figures are indicative

NIC Bank is headquartered in Nairobi, Kenya. The bank has 30 branches, 24 in Kenya, five in Tanzania and one in Uganda.

i. Improve access to finance for SMEs: The Project will allow NIC to grow its SME portfolio and provide this crucial segment of the economy with access to longer term funding, thereby enabling SME''s to undertake investment projects with more appropriate financing structures.
ii. IFC''s subordinated loan will strengthen the capital base of the Bank. This will ensure that NIC complies with new regulatory capital requirements that are aimed at improving the overall risk profile of the banking sector
iii. Enhancing regional competition and service. The project will contribute to the success of the East African economic community by supporting a strong local bank with a growing regional footprint.

i. By providing long-term funding, IFC will improve NIC''s funding profile and asset liability management. The funding will allow the bank to lengthen the tenor of funding to its SME clients without increasing the maturity mismatch risk on the balance sheet.
ii. A partnership with IFC is in line with the Bank''s efforts to diversify its capital and funding sources to support the growth strategy.
iii. Generate a demonstration effect: The Project is expected to promote the use of long term funding which will enhance prudent balance sheet risk management across the banking sector.

The project has been categorized as FI-2 according to IFC’s Environmental and Social Review Procedures. Across the NIC group and particularly in Kenya, the business activities financed include some medium risk sectors from the E&S perspective such as manufacturing, real estate, wholesale and Transport. NIC offers different types of products to its clients such as overdraft, working capital, SME and corporate finance, etc. The bank has not been involved in project financing. The applicable requirements are the Exclusion List, the relevant environmental and social laws and regulations in the countries where NIC Bank operates and the Performance Standards in case of corporate finance transactions.The project has been categorized as FI-2 according to IFC’s Environmental and Social Review Procedures. Across the NIC group and particularly in Kenya, the business activities financed include some medium risk sectors from the E&S perspective such as manufacturing, real estate, wholesale and Transport. NIC offers different types of products to its clients such as overdraft, working capital, SME and corporate finance, etc. The bank has not been involved in project financing. The applicable requirements are the Exclusion List, the relevant environmental and social laws and regulations in the countries where NIC Bank operates and the Performance Standards in case of corporate finance transactions.

The main E&S risks and impacts of this project relate to the ability of NIC Bank to identity and manage the E&S risks and impacts associated with its lending activities. NIC Bank has recently developed a group ‘Environmental & Social Risk Policy - ESP’ and the ‘Environmental and Social Review Procedures - ESRP’. These documents cover all the group’s lending activities except retail lending at the Bank. The system has guidelines/procedures for E&S risk assessment which reflect the bank’s lending activities and process. The group guidelines cover compliance with the Exclusion List adopted by the group, applicable national laws and the Performance Standards. The client will be required to include additional IFC clauses to the existing exclusion list. The client will also be required to amend the scope of the application of its ESMS to cover all its business activities, including the full spectrum of corporate lending. The bank is currently in the process of implementing the E&S risk management framework into its existing credit risk management and compliance process. When successfully implemented, NIC Bank’s E&S risk management process is considered adequate. The client will be required to meet a timeline agreed with IFC for this implementation process. NIC Bank has a team of appointed E&S officers within the credit risk team who are dedicated to the formulation and implementation of E&S risk management procedures. E&S risk training will be required for the bank’s credit officers. The bank complies with IFC’s Performance Standard 2 requirements on Labour and working conditions.The main E&S risks and impacts of this project relate to the ability of NIC Bank to identity and manage the E&S risks and impacts associated with its lending activities. NIC Bank has recently developed a group ‘Environmental & Social Risk Policy - ESP’ and the ‘Environmental and Social Review Procedures - ESRP’. These documents cover all the group’s lending activities except retail lending at the Bank. The system has guidelines/procedures for E&S risk assessment which reflect the bank’s lending activities and process. The group guidelines cover compliance with the Exclusion List adopted by the group, applicable national laws and the Performance Standards. The client will be required to include additional IFC clauses to the existing exclusion list. The client will also be required to amend the scope of the application of its ESMS to cover all its business activities, including the full spectrum of corporate lending. The bank is currently in the process of implementing the E&S risk management framework into its existing credit risk management and compliance process. When successfully implemented, NIC Bank’s E&S risk management process is considered adequate. The client will be required to meet a timeline agreed with IFC for this implementation process. NIC Bank has a team of appointed E&S officers within the credit risk team who are dedicated to the formulation and implementation of E&S risk management procedures. E&S risk training will be required for the bank’s credit officers. The bank complies with IFC’s Performance Standard 2 requirements on Labour and working conditions.

Task Title & Description	Anticipated Completion Date
Establish SEMS	12/31/2014
Formalize procedures	09/30/2015
Staff Training	03/31/2015
Life & Fire Safety Audit	12/31/2014