37706 - BSP PNG A Loan

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Summary of Investment Information

Project Number

37706

Company Name

BSP Financial Group Limited

Date SPI Disclosed

Mar 21, 2016

Country

Papua New Guinea

Region

East Asia and the Pacific

Projected Board Date

Apr 22, 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 : Jun 9, 2016
Signed : Jul 15, 2016
Invested : Jun 8, 2017

Sector

Finance Companies

Project Description

The proposed investment is for IFC to provide a 5-year tenor A loan amounting US$ 30 million to Bank South Pacific Limited (“BSP” or the “Bank”) channeled to RMA Financial Services (Cambodia) Plc (“RMA FS Cambodia”or the “Company”) to support RMA FS Cambodia’s portfolio growth. RMA FS Cambodia will soon be renamed to BSP Finance (Cambodia) Plc.

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

IFC''s role is expected to encompass the following: (i) providing the Bank with a long-term USD loan to underpin their long-term strategy in Asia Pacific region especially in PNG and Cambodia both of which are IDA countries; (ii) demonstrating confidence in and support for the largest and indigenous bank in PNG implementing its long-term strategic goals of expansion to other region; and (iii) increasing access to finance for agriculture related businesses in Cambodia, which is important sector for the country''s economy, generating 70% of employment and contributing to more than 30% of the country''s GDP and yet vulnerable due to poor business environment and little investment.

The Project is expected to have significant development impact on account of:
(i) Increase access to finance: The Project is expected to provide long-term funding which availability is limited in Cambodia, an IDA country;
(ii) Stamp of approval: The Project will demonstrate IFC''s continued support to the development of PNG''s financial sectors;
(iii) Capacity building: The project will provide further opportunities for capacity building through advisory services, primarily in corporate governance, business process improvement and risk management areas.

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

This project involves a senior loan to BSP channeled to RMA FS Cambodia to finance the portfolio growth of RMA FS Cambodia. BSP as a universal bank provides retail, SME and project/corporate finance lending to its customers. RMA FS Cambodia is primarily focused on financing SMEs that operate mainly in transport, agriculture and construction sectors and its 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. Given types, sectors, size and tenor of planned lending activities the overall portfolio risk is considered to be medium. The project has therefore been categorized as FI-2 in accordance with IFC’s Environmental and Social Sustainability Policy. For this project the client will be required to screen loans against the IFC Exclusion List and the relevant E&S laws and regulations of host countries and IFC Performance Standards, if applicable.

The main E&S risks and impacts of the project derive from the E&S risks of the bank’s lending activities, the capacity and systems in place to manage these risks, and the bank’s practices with regard to labor and working conditions. BSP has an Environmental and Social Management System (ESMS) outlining the procedures, responsibilities and tools for undertaking E&S risk management. The ESMS needs to be upgraded in line with IFC’s 2012 Sustainability Framework. The bank has nominated E&S roles and responsibilities and a full-time E&S officer will be appointed to ensure effective implementation of the upgraded management system. The bank has developed and implemented HR policies and procedures that are generally aligned with the objectives of Performance Standard 2 on Labor and Working Conditions. The bank also regularly reports to IFC on its E&S performance. The bank will also be required to upgrade its existing grievance mechanism for employees and develop a communication mechanism for external stakeholders.

Contacts

For Inquiries About the Project, Contact

Robin Fleming
Chief Executive Officer
Bank of South Pacific
PO Box 78
Port Moresby, NCD,
Papua New Guinea
Tel: +675-322-9168
Fax: +675-320-2683
Email: mailto:rfleming@bsp.com.pg
Web: http://www.bsp.com.pg

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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
Appoint full-time E&S officer	04/30/2016
Upgrade ESMS	05/31/2016
Staff Training Plan	04/30/2016
Provide ESMS implementation report	08/31/2016
Upgrade existing grievance mechanism	05/31/2016
Develop a communication mechanism	05/31/2016

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