36295 - BLC SME RSF

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Summary of Investment Information

Project Number

36295

Company Name

BLC BANK SAL

Date SPI Disclosed

Nov 23, 2015

Country

Lebanon

Region

Middle East

Projected Board Date

Dec 31, 2015

Environmental Category

FI-2 - Limited

Status

Pending Disbursement

Last Updated Date

Nov 30, 2016

Department

Regional Industry - FIG ME & Africa

Industry

Financial Markets

Previous Events

Approved : Mar 15, 2016
Signed : May 30, 2016

Sector

Commercial Banking - SME Finance

Additional Project Attributes

Blended Finance

Project Description

The project consists of a risk sharing facility (“RSF”) to BLC Bank (“BLC” or the “Bank”) to support the Bank in expanding into the SME segment in Lebanon, with a focus on Small and Very Small Enterprises (VSEs) including Women-Owned Businesses (WBs), and develop targeted products for these clientele using a guarantee product to underpin credit risks.

Established in 1950, BLC Bank is a commercial bank in Lebanon headquartered in Beirut. The Bank offers a wide range of financial products and services to corporate, retail, and SME segments through a well-established and growing network of 41 branches across Lebanon, a representative office in Abu Dhabi, UAE and 14 branches in Cyprus through its wholly owned subsidiary USB Bank plc.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	10.0
Loan
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
Guarantee	Loans to SME Borrowers

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

Development Impact

The proposed project is expected to have the following development impact:

(i) Enhance access to finance to underserved segments of the SME sector, such as women entrepreneurs and very small enterprises, thus enabling them to grow and expand their business and continue to play a key role in supporting Lebanon''s economic growth and job creation;
(ii) Support a local bank to maintain and expand its SME business market share. This is especially critical at this juncture given the uncertainties in the region and the economic slowdown in MENA and Europe, which is affecting Lebanon;
(iii) Attract private sector investment flows and promote SME finance as a viable asset class; and
(iv) Support the Bank in scaling up the SME sector especially small businesses, including very small and women-owned enterprises businesses, and to anchor its position in the market.

IFC''s additionality is clear since:
(i) Countercyclical Approach: SMEs are facing particularly acute challenges in the current market given low economic growth and increased stress stemming from the Syrian crisis, which has forced banks to raise standards and lower risk appetite, especially for smaller firms. By providing the necessary risk cushion, IFC will support the Bank''s engagement in the sector.
(ii) Supporting Underserved Segments: IFC will support BLC in lending to the underserved segments of the SME sector such as Women Owned Businesses and VSEs/Small Enterprises. This is a priority as these segments are generally ignored by some banks as they are considered risky and have weak collateral to offer. The guarantee under the RSF enables BLC to complete its coverage in this sector.
(iii) Access to Finance: Enhances access to finance in the Lebanese market. Also, IFC''s involvement through the MENA SME Facility will be a signal of support to the SME sector in Lebanon.
(iv) Under the MENA SME Facility, IFC is catalyzing additional financing by partnering with EIB, EC, AFD and the World Bank.

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 is a risk sharing facility (RSF) of up to US$10 million to BLC targeting Small and Medium Enterprises (SMEs). Under the RSF SME portfolio, the bank exposure is mainly to low risk sectors such as trade and services, and lower extent to medium risk sectors including health and industrial processing. The RSF portfolio will largely be comprised of business activities that have limited adverse environmental and social risks and impacts that are few in number, site specific, largely reversible and can be readily addressed through mitigation measures.

This project is classified as Category FI-2 project according to IFC’s Environmental and Social Review Procedure. For this project the client will be required to screen loans under the RSF against the IFC Exclusion List and host country Environmental and Social laws and regulations.

Contacts

For Inquiries About the Project, Contact

Mr. Hani Hoyek
Head of Strategic Development – BLC Bank
Address: BLC Bank Building, Adlieh Square
2064-5809 Beirut, Lebanon
Telephone: +961-1-387000 Ext. 1328
E-mail: mailto:Hani.Hoyek@blcbank.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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Task Title & Description	Anticipated Completion Date
Nominate officers	11/30/2015
Establish SEMS	11/30/2015
Staff Training	01/29/2016
Complete documentation of HR policies and procedures in line with PS2	06/30/2016

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