38134 - Galicia CL III

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Summary of Investment Information

Project Number

38134

Company Name

BANCO DE GALICIA Y BUENOS AIRES S.A

Date SPI Disclosed

Apr 14, 2016

Country

Argentina

Region

Latin America and the Caribbean

Projected Board Date

May 16, 2016

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 27, 2024

Department

Regional Industry - FIG LAC

Industry

Financial Markets

Previous Events

Approved : May 4, 2017
Signed : May 24, 2016
Invested : Aug 24, 2016

Sector

Commercial Banking - General

Project Description

The proposed project consists of an up to US$130 million loan to Banco Galicia (the “Bank”) to be structured in two tranches: (a) a 5-year tranche to on lend to small and medium enterprises (“SMEs”); and (b) a 7-year tranche to on lend to sustainable energy finance (“SEF”) projects in Argentina.

As of December 2015, Banco Galicia ranked third in Argentina in terms of assets and fourth in terms of deposits and loans, with a market share of 7.4% and 8.9%, respectively. In addition, the Bank ranks second among private banks, behind Banco Santander Rio. Banco Galicia is a full service bank with a significant presence in the retail and SMEs sectors, with a strong focus in agribusiness. In addition, the Bank has 5,573 employees and almost 4 million active clients.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	130.0
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
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 Banco Galicia''s capacity to support access to finance for SMEs. SME finance is a key priority for IFC and this project contributes to reducing the financing gap by providing scarce long-term financing to SMEs, thus helping them support capital expenditure programs and investment in capacity expansion leading to employment generation and growth.
In addition, the project will promote long-term lending to sustainable energy finance projects by fostering the use of sustainable energy sources that have low environmental impact as well as projects supporting the more efficient use of energy therefore reducing greenhouse gas emissions.

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

Environmental Category: Category FI 2

E&S Categorization Rational: The proposed project consists of an up to US$130 million loan to Banco Galicia structured in two tranches to support small and medium enterprises and SEF projects in Argentina, which may include small scale renewable energy and energy efficiency project. The majority of the facility will be directed to the SME component and is expected to have low to medium E&S risks. The expected pipeline of SEF sub-projects may support energy efficiency improvements or the construction, expansion or acquisition of small-scale self-supply schemes from wind, solar, biomass, heating or geothermal. In the scale proposed, the potential pipeline is expected to involve only medium E&S risk operations and is unlikely to include category “A” sub-projects. Based on the expected risks of the portfolio supported by the project, it has been classified as FI-2 category, according to IFC’s Sustainability Framework.

The key risks and impacts derive from Banco Galicia’s capacity to implement a management system to identify and manage the potential environmental and social risks associated to SME and SEF lending. Risks may include, but are not restricted to social and environmental issues such as (i) air emissions, waste management, agrochemicals and hazardous materials; (ii) OHS (occupational health and safety) risks such as process safety, gas releases, chemical hazards and fire and explosions and (iii) community issues such as land acquisition, health, safety and stakeholder engagement. Galicia has an existing ESMS with sufficient capacity to manage the E&S risks, but given that it has not recently invested in renewable energy, the bank will be required to build up its procedures and capacity as well as to expand the scope of application of its ESMS.

Contacts

For Inquiries About the Project, Contact

Carlos E. López
Senior Vice President – International Division – Financial Area, Banco Galicia
Teniente General Juan Domingo Perón 430
Buenos Aires, Argentina
Telephone: +54 11 6329 6133

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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
ESMS enhancement and Staff training Plan	06/15/2016
Implement ESMS enhancements and capacity building program	12/12/2016

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