38570 - DCM Multibank

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Summary of Investment Information

Project Number

38570

Company Name

Multibank Inc.

Date SPI Disclosed

Sep 29, 2016

Country

Panama

Region

Latin America and the Caribbean

Projected Board Date

Nov 2, 2016

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Nov 3, 2016
Signed : Nov 29, 2016
Invested : Dec 28, 2016

Sector

Commercial Banking - General

Project Description

The project entails a US$40 million 8 year loan to be used to fund the growth of Multibank Inc.’s SME and housing portfolios. The project will improve access to finance for SMEs and low income housing in Panama, where the majority of top banks focus on corporates and high end retail clients allow the bank to access long term funding.

Associated Advisory Engagement

IFC Advisory team is at the same time providing technical assistance to Multibank on Sustainable Energy Finance (“SEF”) and developing green products.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	40.0
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	Housing Finance

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

Development Impact

1) Improved access to finance for under or unserved SMEs in Panama leading to reduced inequality
2) Increase shared prosperity by improving access to affordable housing financing.
3) Combined IFC investment and advisory project that will assist Multibank in assessing the level of SEF in their portfolio currently and developing green products to increase energy efficiency and renewable energy financing in the country at a time when demand is increasing and no banks currently offer such "green solutions".

1) Long term relationship: the Project builds upon IFC''s successful relationship with a growing client in a market that is expected to outperform other markets in the region with a different product that is tailored to the Bank''s needs.

2) Know-how and knowledge sharing through the proposed advisory project where IFC will assist the Bank in identifying the SEF loans in its current portfolio and to develop new sustainable finance products aiming to differentiate the bank in its market and generate a profitable new business line.

3) Long term financing not available to the bank currently that will allow it to better match its assets and liabilities, particularly for its long term mortgage portfolio and enable its growth.

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 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 proposed investment consists of a US$40 million loan to be used to fund the growth of Multibank’s SME and housing portfolio. Multibank is a universal bank that provides a broad range of banking services and has a strong history of supporting SMEs. Multibank’s portfolio is mainly composed of retail (21%), housing (18%), commercial and service operations for both corporate and SME clients (35%). SME lending under the asset class supported accounts for approximately 5% of the total portfolio. IFC will also be providing technical assistance to bank on sustainable finance to expand the bank’s work in this area. The overall portfolio risks includes limited 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. The project has been categorized as FI-2 in accordance with IFC’s Sustainability Policy. For this project, Multibank will be required to screen the loans against the IFC Exclusion List and the Panamanian environmental and social laws and regulations.

The key E&S risks and impacts derive from Multibank’s capacity to identify and manage the potential environmental and social risks associated with its lending activities particularly lending to SME’s in the manufacturing and agribusiness sectors. Additional E&S risks and impacts of the project derive from the capacity and systems in place to manage these risks, and the Company’s practices with regards to labor and working conditions. Multibank has implemented an environmental and social management system and has dedicated E&S staff in place. The environmental and social review procedure comprehends the entire loan cycle, this includes: (i) environmental and social due diligence, (ii) action plan design, (iii) monitoring, and (iv) inclusion of environmental and social covenants in the credit agreements. Sub project classification applies low- medium- high risk approach, environmental due diligence includes screening against IFC’s Exclusion List and verification of compliance with national environmental and social requirements. Key environmental and social staff has been trained in the management of environmental and social aspects.

Contacts

For Inquiries About the Project, Contact

Milciades Denis, Head Treausry & Investments
127 Via Espana, Edificio Prosperidad,
Panamá City, Panamá
mailto:mdenis@multibank.com
+507 294 3500

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