36252 - GTBK Senior Loan

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Summary of Investment Information

Project Number

36252

Company Name

GUARANTY TRUST BANK (KENYA) LIMITED

Date SPI Disclosed

Mar 16, 2015

Country

Kenya

Region

Africa

Projected Board Date

Apr 17, 2015

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Regional Industry - FIG ME & Africa

Industry

Financial Markets

Previous Events

Approved : May 28, 2015
Signed : May 27, 2016
Invested : Sep 12, 2016

Sector

Commercial Banking - SME Finance

Project Description

Guaranty Trust Bank (Kenya) Limited (“GTBank Kenya” or the “Bank”) was formed in December 2013 following the acquisition of Fina Bank Limited (“Fina Bank”) and its subsidiaries in Uganda and Rwanda by Guaranty Trust Bank Plc (“GTBank Plc”). Fina bank started its operations in Kenya in 1995, Rwanda in 2005 through acquisition of Banque Continental Africaine du Rwanda and founded Fina Bank (Uganda) Limited in 2008. The Bank positioned itself as the preferred bank for entrepreneurs of Small and Medium Enterprises (“SMEs”) and is presently offering banking services through a network of 14 branches across Kenya. GTBank Kenya owns 100% of Guaranty Trust Bank (Uganda) Limited and 94.36% of Guaranty Trust Bank (Rwanda) Limited.

IFC will offer GTBank Kenya a senior loan of up to US$35 million whose purpose will be to support the Bank’s lending program to Small and Medium Size Enterprises (“SMEs”), middle market companies and corporates.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	35.0
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

1. Increased access to finance for SMEs: by providing financing for on-lending to SMEs and medium sized corporates in the region, the project will increase their competitiveness and foster economic development.
2. The project will enable the Bank to diversify its asset base and build a solid full service commercial bank that has sound risk management and corporate governance practices.
3. The project will allow the bank to support agribusiness, manufacturing and information, communication and technology sectors, all critical in job creation and economic development.

1. Provision of US Dollar liquidity: the project will provide a strategic partner bank with much needed US dollar liquidity required to on-lend to borrowers who have foreign currency revenues.
2. Long-term capital: the project will provide scarce long-term financing necessary for on-lending to critical economic sectors whilst enabling GTBank Kenya avoid maturity mismatches.
3. Financial sector development: by investing in GTBank Kenya, IFC will continue to reinforce its commitment to the Kenyan banking sector, the long-term viability of a partner bank and its continuous efforts to strengthen international best practices in banking including environmental and social standards as well as corporate governance.

E&S Category Rationale / Risks and Mitigation

The project has been categorized as FI-2 according to IFC's Environmental and Social Review Procedures. GT Bank provides financial products and services to retail and commercial clients in Kenya. The main sectors financed include trade, services, construction, financial services, transport and communication, and tourism. The potential E&S risks and impacts associated with the bank's key sectors are considered limited and can be readily addressed through mitigation measures. The overall portfolio risk is therefore consideredmedium.The applicable requirements are the IFC Exclusion List, the applicable national social and environmental laws in Kenya and the Performance Standards.

The main E&S risks and impacts relate to the ability of the bank to identify and manage the E&S risks associated with its lending activities as well as the bank's labor standards as compared to the standards set forth in Performance Standard 2. In line with IFC's requirements for financial intermediaries, GT Bank will be required to appoint an E&S Officer and implement an Environmental and Social Management System (ESMS). As a subsidiary of GT Bank Plc Nigeria, the bank is expected to adopt the group ESMS and adapt it to its operations. GT Bank Nigeria has developed an implementation and training plan for all subsidiaries; in order to meet the requirements for this project, the timelines for GT Bank Kenya will be brought forward. To complement the ESMS, the bank will need to develop an external grievance mechanism to enable affected parties raise concerns about the projects it finances. In relation to the bank's labor standards, a review of the policies and procedures revealed that no non-compliance with the requirements of Performance Standard 2.

Task Title & Description	Actual Due Date	Status
Nominate officers	04/04/2015	Completed
Establish SEMS		Completed
Staff Training	10/01/2015	Completed
Other1 Development of a Training PlanDevelopment of an External Grievance MechanismVerification of ESMS Implementation		Completed

Contacts

For Inquiries About the Project, Contact

Mr. Adekunle Sonola
Managing Director, East Africa
Guaranty Trust Bank (Kenya) Ltd
Plot 1870, Woodvale Close,
Westlands, Nairobi
Kenya
Tel: + 254 (20) 328 4000
mailto:kunle.sonola@gtbank.com

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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.

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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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