38771 - Scotia El Salvad SME and Housing Loan

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Summary of Investment Information

Project Number

38771

Company Name

SCOTIABANK EL SALVADOR SA

Date SPI Disclosed

Feb 27, 2017

Country

El Salvador

Region

Latin America and the Caribbean

Projected Board Date

Mar 31, 2017

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Apr 14, 2017
Signed : May 24, 2017
Invested : Jun 19, 2017

Sector

Commercial Banking - General

Project Description

The project consists of a 7 year loan up to US$50 million to Scotiabank El Salvador S.A. to fund the growth of lending to small and medium enterprises (“SMEs”) and low and middle income home owners in El Salvador.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
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

Contribution to Economic Growth. The Project is expected to contribute to the WBG goals by supporting economic growth in El Salvador by providing long term access to finance to SMEs and mortgages through a leading bank in a market faced with poverty and a large housing deficit. Increased access to finance to SMEs is also believed to assist in creating opportunities for jobs, which is considered a critical link in poverty reduction and economic growth; two areas identified in El Salvador as challenges to be tackled. \r\rDemonstration Effect: By providing long term funding to Scotia El Salvador, which is new in the market, IFC hopes to create a competitive environment in the banking sector and encourage other banks in El Salvador to seek and provide financing with longer terms. IFC's loan hopes to increase availability of longer tenor lending instruments to provide low and middle income mortgages and financing for SMEs.

Funding diversification and long-term tenor. The proposed loan will help the Bank to diversify its funding sources and provide a long-term tenor aligned with the tenor of SME and/or Housing loans. With the addition of IFC as a second DFI lender, it increases the chances of the Bank attracting additional financing from other international lenders. Strategic Relationship with a Sponsor. The Project is part of a larger strategy to advance a long-term relationship with the Parent, and follows on the heels of the IFC loan with Scotiabank Costa Rica, another direct subsidiary of Bank of Nova Scotia in the Central American region.

E&S Category Rationale / Risks and Mitigation

The proposed investment consists of a credit for US$50 million, to support the Bank’s lending program for mortgages to lowmedium income borrowers and expand its lending to SMEs. Scotiabank ES main focus of its operations is in the real state sector and is looking to expand its SME lending with this project. SME lending under the asset class supported accounts for approximately 5.6 % of the total portfolio. The overall portfolio risks includes a limited number of 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 Scotiabank ES will be required to screen the loans against the IFC Exclusion List and the environmental and social laws and regulations of El Salvador.

The key E&S risks and impacts derive from Scotiabank ES’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 services sectors, which typically include: occupational health and safety, pollution prevention, waste and wastewater management, labor and working conditions, among others. Moreover, E&S risks and impacts of the project may arise from the capacity and management systems in place to address these risks. Scotiabank ES has implemented a satisfactory environmental and social management system and has personnel responsible of its operation. The bank will be required to continue implementing the environmental and social management system to ensure its investments are in compliance with the applicable environmental and social requirements and to continue its commitment to applying the labor standards.

Contacts

For Inquiries About the Project, Contact

Company	Scotiabank El Salvador S.A.
Point of Contact	Ana Trabanino
Title	Head of Treasury
Telephone Number	(503) 2234-4516
Email	Ana.Trabanino@scotiabank.com.sv
Mailing Address	Centro Financiero 25 Av. Norte y 23 Calle Poniente No. 1230 San Salvador, El Salvador, C.A.
Website	http://www.scotiabank.com.sv/banca-personal/default.aspx

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.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

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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