39507 - DCM SCB CVA

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Summary of Investment Information

Project Number

39507

Company Name

RSF Standard Chartered CVA

Date SPI Disclosed

Apr 30, 2018

Country

World Region

Region

Global

Projected Board Date

Jun 29, 2018

Environmental Category

FI-3 - No Impact

Status

Hold

Last Updated Date

Jun 12, 2021

Department

Products Clients and Innovation

Industry

Financial Markets

Sector

Derivatives (Includes Risk Management Entities)

Project Description

The proposed project consists of IFC providing up to US$250 million of unfunded risk protection on a global portfolio of derivatives related EM counterparty exposures held by Standard Chartered Bank.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	150.0
Loan
Equity

Development Impact

The transaction would support Standard Chartered Bank's management of its derivatives-related Emerging Markets credit exposures. These exposures often cannot be hedged using risk management products currently available in the international capital markets. As a result, the amount of market risk management products that Standard Chartered Bank itself can offer its Emerging Markets clients is limited - given the increasing amounts of capital that needs to be allocated by banks to exposures arising from the provision of such products. By enabling Standard Chartered Bank to hedge a portion of these credit exposures, IFC will free up capacity at the bank for it to provide more risk management solutions to its Emerging Markets clients - something that IFC would not be able to do on its own. The portfolio - rather than name-by-name - hedging approach being used in this project should also prove relevant to other large banks who face constraints on the amount of credit exposure they can assume in the context of providing their emerging markets clients with market risk management solutions.

Given its Emerging Markets transaction structuring experience, IFC is uniquely positioned to undertake a debut transaction of this nature, and demonstrate the viability of the proposed product approach - both in terms of it appropriately taking credit exposure to a portfolio composed of a wide variety of emerging markets-related counterparties, as well as structuring ways for the portfolio to accommodate new exposures over time.

E&S Category Rationale / Risks and Mitigation

The Project consists of IFC providing unfunded risk protection on a global portfolio of derivative related counterparty exposures held by Standard Chartered Bank. The derivatives covered by the project will be mostly plain vanilla forex and interest hedging products supporting trade activities of the bank that have minimal or no E&S risks associated with them. The project has been therefore classified as a Category FI-3 project according to the IFC Environmental and Social Sustainability Policy. The applicable requirements for the project include the IFC Exclusion List and other eligibility criteria as established by IFC. The agreement with Standard Chartered Bank will specify that the derivative related trades covered by the project meet the above requirements and will require Standard Chartered Bank to report on implementation. IFC will also review the details of the underlying transactions to confirm their compliance with the above requirements on a regular basis.

Contacts

For Inquiries About the Project, Contact

Standard Chartered Bank
Sam Phillips
Managing Director, CVA Trading
Standard Chartered Bank, 1 Basinghall Avenue, London, United Kingdom, EC2V 5DD
www.sc.com

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