38024 - BFL Loan

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Summary of Investment Information

Project Number

38024

Company Name

BANQUE FRANCO-LAO LTD

Date SPI Disclosed

Mar 21, 2016

Country

Lao People's Democratic Republic

Region

East Asia and the Pacific

Projected Board Date

Apr 25, 2016

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : May 10, 2016
Signed : Apr 24, 2017
Invested : Jun 30, 2017

Sector

Commercial Banking - General

Project Description

The Project (“BFL Loan”) consists of a senior loan of up to US$15 million to be provided to the Banque Franco-Lao Ltd. (“BFL” or “the Bank”) with a up to 7-year maturity in order to support the Bank to further extend loans to the SME sector in Lao PDR.

Sponsor / Cost / Location

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

Development Impact

Long-term funding: Project will provide long-term funding, which is limited in Laos, especially during this liquidity stress period in banking system.
(ii) Improve market confidence: This will be the 2nd USD loan for a bank in Laos thus far. This IFC loan to BFL will demonstrate IFC''s continued support to the development of Lao''s financial industry, which will enhance prospects of mobilizing additional long-term funding from investors.

E&S Category Rationale / Risks and Mitigation

This transaction involves a senior loan to support the bank’s SME lending and 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. The current and prospective SMEs portfolio includes a variety of sectors such as transportation, trade, tourism, small-size construction, education, retail and manufacturing considered to be medium risk sectors with limited E&S risks and impacts which can be readily addressed through mitigation measures. The Applicable Requirements are the Exclusion List and the National E&S Laws of the PDR of Lao.

The main E&S risks and impacts of the project derive from the bank’s SME borrower activities and the bank’s capacity and system to manage the E&S risks associated with these activities and its practices with regard to labor and working conditions. Under the requirements of IFC’s existing investment, a Risk Share facility dedicated to women borrowers, BFL has developed an ESMS to address the potential E&S risks of this specific facility. For this project, the bank will need to expand the E&S risk management coverage to the entire SME lending, including screening against the IFC exclusion List and ensure compliance with the applicable national laws and regulations. The bank is required to submit periodic E&S performance reports to IFC.

Contacts

For Inquiries About the Project, Contact

Guilaume Perdon
Executive Managing Director
Banque Franco-Lao Ltd.
Lane Xang Avenue, Hatsady Village
Chanthabouly District
P.O. Box: 5720
Viantiane Capital, Lao PDR
Tel: +856 21 285 111
Fax: + 856 21 285 222

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Local Access of Project Documentation

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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.

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Task Title & Description	Anticipated Completion Date
Expand the ESMS to the entire SME lending	09/30/2016

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