39434 - Banco Industrial SME

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Summary of Investment Information

Project Number

39434

Company Name

BANCO INDUSTRIAL DO BRASIL S.A.

Date SPI Disclosed

Mar 14, 2017

Country

Brazil

Region

Latin America and the Caribbean

Projected Board Date

Apr 14, 2017

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Sep 29, 2022

Department

Regional Industry - FIG LAC

Industry

Financial Markets

Previous Events

Approved : Apr 14, 2017
Signed : May 24, 2017
Invested : Jun 1, 2017

Sector

Commercial Banking - SME Finance

Project Description

The proposed project consists of a total package of US$ 50 million, composed of an A Loan from IFC’s own account of US$ 20 million and a B Loan component of US$ 30 million to Banco Industrial do Brasil S.A. (“BIB” or “the Bank”). The proceeds will be used to finance small and medium enterprises (“SMEs”) and will allow IFC to promote SME’ sustainability through financial inclusion. A minimum of 25% of the total financing package will be channeled to women-ownedSMEs, reaching the underserved women-owned business (the “Project”). The proposed project is expected to support the Bank’s financing of SMEs, and women-owned SMEs, and is aligned with the objectives of IFC’s Banking on Women program and the Women Entrepreneurs Opportunity Facility (the “WEOF” or the “Facility”), a facility created by IFC and the Goldman Sachs 10,000 Women initiative which targets the dual goals of expanding access to capital to women entrepreneurs in developing economies and demonstrating the commercial viability of investing in women.”

Associated Advisory Engagement

N.A.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	26.70
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

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

Development Impact

Enhance access to SME finance: the Project will support SME financing in Brazil through BIB. In developing countries, lack of access to finance is a major constraint and hence SME finance has become a top priority for IFC in its dual-goal of poverty reduction and boosted prosperity. In the current Brazilian context, this Project gains a broader relevance as SMEs are the first to be impacted by shortage of credit supply in times of economic recession. Banking on Women: The Project will increase the financial inclusion for women-owned SMEs, thus having a demonstration effect of the business opportunities presented by women entrepreneurs as an under-served market in Brazil.

The senior loan facility will have a target of at least 25% of the use of proceeds for on lending to women owned SMEs: IFC's facility will enable the Bank to increase the reach of lending to this underserved market, promoting women-owned enterprises as a separate sub segment within the SME space. Mobilization and access to international banks: Through the syndication process, IFC will provide BIB with the opportunity to start a relationship with banks that current do not operate with them. The target is Asian or Arabic banks, a market which BIB has not yet been able to access and in which IFC's help could be crucial.

E&S Category Rationale / Risks and Mitigation

This project consists of an US$50 million A/B loan to support Banco Industrial's (BIB) lending operations to Brazilian SMEs, with a 25% min. target of the total package for women-owned SMEs, and has been classified as Category FI-2 according to the IFC's Sustainability Framework. Overall portfolio risks include a limited number of business activities that have potential limited adverse environmental and social risks or impacts that are few in number, generally site specific, largely reversible, and readily addressed through mitigation measures.

The key risks and impacts of the project derive from the Bank's capacity to maintain its E&S management system (ESMS) to identify and manage the potential environmental and social risks associated with its sub-projects. Risks associated with BIB's SME lending are of medium to low nature, typically related to occupational, health and safety. The portfolio of SMEs is developed through a relationship based origination and diversified in services, industry and commerce sectors. Since 2007, BIB has a board approved ESMS structured in procedures to screen against restricted activities and compliance with applicable E&S laws. As part of the proposed project, the Bank will be required to develop and implement a staff training program to enhance ESMS implementation, continue its commitment to applying the labor standards established by the IFC Performance Standard as well as provide a periodic report to IFC.

Contacts

For Inquiries About the Project, Contact

Banco Industrial do Brasil S.A.
Guilherme Gottardi
Head of International Division
+55 11 3049-9751
guilherme.gottardi@bancoindustrial.com.br
Av. Pres. Juscelino Kubitschek, 1703, 3º Andar- 0453-901, São Paulo-SP, Brasil
www.bancoindustrial.com.br

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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
Staff Training	10/21/2017

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