37098 - Itau PY Loan

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Summary of Investment Information

Project Number

37098

Company Name

BANCO ITAU PARAGUAY S.A.

Date SPI Disclosed

Aug 24, 2015

Country

Paraguay

Region

Latin America and the Caribbean

Projected Board Date

Sep 30, 2015

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Nov 6, 2015
Signed : Nov 23, 2015
Invested : Dec 9, 2015

Sector

Commercial Banking - General

Project Description

The proposed project consists of a 7-year loan for US$60 million to be provided by IFC to Banco Itau Paraguay S.A. (“Itau Paraguay” or the “Bank") to support its lending activities to small and medium enterprises (“SMEs”) in Paraguay, and an additional US$30 million loan under IFC’s Managed Co-Lending Portfolio Program (“MCPP”) under the same terms and conditions (the “Project”).

Itau Paraguay is the largest bank in Paraguay in terms of assets, deposits and equity and the second largest by size of loans. The Bank employs 851 staff and has 34 branches and 305 ATMs across the country.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	60.0
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

IFC''s long-term financing is expected to bring high development impact by enhancing the Bank''s capacity to support access to finance for SMEs, resulting in higher growth, employment generation and poverty reduction. Furthermore, the project would generate a demonstration effect by signaling other private investors about the potential presented by the local financial system.

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 Category FI-2 according to the IFC''s Sustainability Framework, since the project will focus on SMEs, which typically have a smaller footprint and E&S impact than corporate clients. Agribusiness transactions, which are the key concern of this project from an E&S standpoint, account for 42% of the Bank’s portfolio (26% agribusiness and 16% cattle raising). While soya is produced mainly in Eastern Paraguay, cattle raising is concentrated in the Chaco, which makes it the riskiest segment of their portfolio. Given the importance of this segment, the Bank has implemented a stricter risk management approach, including continuous monitoring and higher collateral requirements, regardless of the size of sub-clients.

The key risks and impacts derive from Itaú Paraguay’s capacity to enhance its ESMS in order to identify and manage the potential environmental and social risks associated to sub-projects, especially its agribusiness portfolio that presently accounts for 42% of assets. Additionally E&S risks and impacts of the Project derive from the institution's capacity to maintain good practices with regards to labor and working conditions. The Bank’s premises present good LFS procedures with trained staff and fire prevention and combat systems following applicable HC laws.

Contacts

For Inquiries About the Project, Contact

Gustavo Molas
Gerente de Corresponsalía, Banco Itau Paraguay
Av. España esq. Brasilia
Edificio España
Asunción, Paraguay
Telephone: +595-21-217-3894

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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
Upgrade Applicable requirements	04/11/2016
Staff Training	04/11/2016
Implementation Plan of ESMS Enhancements	10/15/2015

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