37719 - FDC III

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Summary of Investment Information

Project Number

37719

Company Name

Federacion de Cajas de Credito y de Bancos de los Trabajadores SC de RL

Date SPI Disclosed

Nov 29, 2016

Country

El Salvador

Region

Latin America and the Caribbean

Projected Board Date

Jan 5, 2017

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 6, 2025

Department

Regional Industry - FIG LAC

Industry

Financial Markets

Previous Events

Approved : Feb 8, 2017
Signed : Aug 17, 2017
Invested : Sep 29, 2017

Sector

Microfinance and Small Business - Non Commercial Banking

Project Description

The proposed project consists of a $50 million remittance-backed funding transaction with Federación de Cajas de Crédito y de Bancos de los Trabajadores, S.C. de R.L. de C.V. (“Fedecredito” or “FDC”) an existing client, intended to support FDC’s growing portfolio of consumer, MSMEs and housing loans that are provided through its 55 member institutions. IFC will participate with $15 million for its own account, and the remaining $35 million will be provided by international investors.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	15.0
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 Microfinance Borrowers

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

Development Impact

i) Increase expansion of microfinance: The project will contribute to FDC''s expansion within El Salvador, increasing its lending activity in less developed regions previously underserved by the financial sector.

ii) Access to financial and non-financial services for MSMEs and low-income households: The project will benefit this target market, in terms of increased access to financial services which stimulates business activity and creates jobs.

iii) Contribution to the development of funding options for local institutions: With the first two DPR transactions, IFC innovated by providing viable, attractive funding options to FDC in El Salvador. Now, IFC will act as a catalyst to mobilize resources from like-minded investors to provide long term funding to FDC.

i) Longer tenor funding from diversified sources: The proposed investment would be the third time that IFC supports FDC in raising longer tenor funding using the program that was established when IFC first engaged with FDC in 2010. The previous two issuances have paved the way for FDC to obtain additional, attractively priced, long tenor financing from other lenders or investors.

ii) Stamp of approval and demonstration effect: IFC''s co-investment in the third issuance under the program will give potential co-investors a sense of confidence and catalyze additional investments. Furthermore, the structure under which the third note series will be issued is currently in use by the previous two series, which are held entirely by IFC.

iii) Know-how and knowledge sharing: IFC''s extensive experience in supporting microfinance entities worldwide should help provide support to FDC in its strategy to a) diversify its funding sources; and b) diversify its product mix and support its effort in targeting particular niches better (e.g. women borrowers).

Indicator	Metrics	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
Access to Finance: Outstanding Microfinance Portfolio (#)	Outstanding Portfolio (#)	Not Available	Not Available	Not Available
Access to Finance: Outstanding Microfinance Portfolio ($)	Outstanding Portfolio ($)	Not Available	Not Available	Not Available
Access to Finance: Outstanding SME Portfolio (#)	Outstanding Portfolio (#)	Not Available	Not Available	Not Available
Access to Finance: Outstanding SME Portfolio ($)	Outstanding Portfolio ($)	Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

The project involves a third transaction with Fedecredito, an existing IFC client in El Salvador, to support its portfolio of individuals and MSMEs through its credit unions, and workers’ banks which have low to medium E&S risks, and as such has been classified as Category FI-2 according to IFC''s Environmental and Social Review Procedure. Fedecredito provides four core products to its members: MSME loans which are mostly used to support working capital to buy equipment, Crédito Popular which supports inventory finance for micro-vendors, Housing loans mainly used for renovations, and Consumer loans. Under projects #28635 and # 33879 Fedecredito was required to develop a Social and Environmental Management System (SEMS) to ensure sub-loan compliance with the IFC Exclusion List and the country E&S laws and regulations. The client has implemented these requirements satisfactorily. During appraisal, IFC reviewed Fedecredito’s portfolio and business strategy, the implementation of the ESMS, and compliance with the requirements of Performance Standard 2; Labor and Working Conditions.

[

The key E&S impacts and risks derive from FDC and the member institutions capacity to identify and manage the potential environmental and social risks associated with its lending activities to MSMEs, in particular agriculture and construction, which could have some social and environmental impacts and risks. Fedecredito has implemented a satisfactory environmental and social management system and has dedicated environmental and social staff in place to provide support to the credit unions in the implementation of the environmental and social procedures. The credit officers at the member institutions are responsible for the initial sub-loan screening against the IFC Exclusion List and verification of compliance with national environmental and social requirements (i.e., permits, licenses, etc.). Key officers at the member institutions have been trained in environmental and social matters. As part of this project, Fedecredito will be required to: (i) maintain a Social Environmental Management System; (ii) enhance its labor policies, and (iii) submit a periodic E&S report to IFC.

]

Contacts

For Inquiries About the Project, Contact

Ernesto Pacheco
Online Banking Manager
FEDECRÉDITO
25 Av. Norte y 23 Calle Poniente, Edificio Macario Armando Rosales Rosa, San Salvador
Telephone: (503) 2209-9679, Mobile: (503) 7841-0589
Website: http://www.fedecredito.com.sv

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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
Enhance its labor policies	02/01/2017

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