37590 - Internac SEF

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Summary of Investment Information

Project Number

37590

Company Name

Banco Internacional S.A.

Date SPI Disclosed

Dec 7, 2015

Country

Ecuador

Region

Latin America and the Caribbean

Projected Board Date

Jan 15, 2016

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Mar 11, 2016
Signed : May 3, 2016
Invested : May 31, 2016

Sector

Commercial Banking - General

Project Description

As part of a joint Investment Services and Advisory Services strategy, the proposed IFC investment consists a senior loan for Banco Internacional (the “Bank”), in order to support the growth of climate smart projects and SME segments.

Associated Advisory Engagement

In parallel, the team will offer an advisory project consisting of a diagnostic and recommendations in order to potentiate the impact and growth of energy efficiency projects. This marks an innovative joint approach which ultimately aims to provide value-added solutions to Banco Internacional.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	30.0
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

The development impact of the project is expected to be high, as it will enhance the Bank''s ability to support projects which ultimately have a direct impact on reducing greenhouse gas emissions, while stimulating growth, employment generation and poverty reduction.

IFC''s term loan will also enhance Banco Internacional''s ability to support small and medium-sized enterprises which will in turn stimulate economic growth, while also increasing outreach and financial inclusion in Ecuador.

Banco Internacional should be able to increase its sustainability by increasing its cross-selling potential and capturing new clients, ultimately increasing the Bank''s profitability.

IFC will continue to implement and enhance international best practices in environmental policies, strengthening the Bank''s environmental management system.

The proposed project is one of FIG''s first climate investments in the market, and will therefore further support the track record creation and demonstration of business case for climate smart and sustainability focused projects through banking institutions in Ecuador.

Through the proposed investment, IFC will support Banco Internacional in strengthening its participation in climate smart projects.

IFC will provide online web IT infrastructure and training using its climate smart reporting tools, like the CAFI tool, which will allow Banco Internacional to effectively measure and perform impact reporting of their climate portfolio.

By providing a 3-year term loan to Banco Internacional IFC would continue to solidify a long term relationship with the Bank and the Group, by supporting its growth in underserved segments with high growth potential. In parallel, IFC is offering the Bank with an advisory offering to better identify energy efficiency business needs.

IFC will continue to enforce international best practices in environmental policies, strengthening the Bank''s environmental management 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 involves IFC support to increase lending to SMEs, including loans for energy efficiency and cleaner production. Lending to small enterprises represents 50% of the commercial loans, followed by corporate loans (33%), and medium enterprises (17%). The lending to SMEs totals 67% of the commercial loans. Internacional lends to sectors such as construction, manufacturing, fishing and agriculture, including clients in the palm oil sector. Most of the portfolio supported through this project is expected to include business activities that have potential limited adverse environmental or social risks or impacts that are few in number, generally site specific, largely reversible, and readily addressed through mitigation measures. As such, the project has been categorized as FI-2. However, some business activities in the agricultural sector might have higher social and environmental risks and impacts, thus requiring specific tools to manage them. For this project, Banco Internacional will be required to ensure that all loans in the asset classes supported comply with the IFC Exclusion List, and the E&S local laws.

The main E&S risks of the project are associated with the impacts of the SME activities financed in sectors such as agriculture, construction, transport, and manufacturing and with the Bank’s capacity to undertake E&S risk management procedures. The potential risks in these sectors revolve around occupational health and safety, pollution prevention & mitigation, community health, safety and security, forced & child labor and biodiversity impacts. Under a previous project with the IFC, Banco Internacional was required to develop procedures to identify, assess and manage the E&S risks related to its borrowers’ activities. While the Bank has started to develop its E&S management system, it is not yet fully implemented. The establishment of the E&S Management System will be a condition of disbursement for this project.

Contacts

For Inquiries About the Project, Contact

Mauricio Larrea
mailto:mlarrea@bancointernacional.ec

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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.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

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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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