41625 - PichinchaGBandSD

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Summary of Investment Information

Project Number

41625

Company Name

Banco Pichincha CA

Date SPI Disclosed

Nov 7, 2018

Country

Ecuador

Region

Latin America and the Caribbean

Projected Board Date

Dec 10, 2018

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Sep 26, 2025

Department

Regional Industry - FIG LAC

Industry

Financial Markets

Previous Events

Approved : Jan 17, 2019
Signed : Mar 29, 2019
Invested : Apr 12, 2019

Sector

Commercial Banking - General

Project Description

The proposed investment in Banco Pichincha (“Pichincha” or “the Bank”), an existing IFC client and Ecuador’s largest bank, consists of:

(i) an investment of approximately US$50 million in a green bond for IFC’s own account, as part of the Bank’s US$250 million green bonds program, for the financing of the Bank’s climate smart portfolio, and

(ii) an investment of up to US$20 million in a subordinated loan for IFC’s own account, plus a US$30 million mobilization, for the financing of the Bank’s SME portfolio.

The Project aims to achieve the following: (i) consolidate a commercial relationship with Pichincha, a strategic client with which IFC can further collaborate through both investment and advisory services, (ii) support the development of local capital markets and climate smart projects by subscribing resources, (iii) enhance the level of credit and financial services offered to underserved SMEs, and (iv) strengthen the Bank’s capital by providing sub-debt which qualifies as Tier II capital under local regulation.

Associated Advisory Engagement

The IFC’s Advisory Services Team is currently providing support to the Bank to strengthen the green portfolio growth through the following activities: (i) assessment of the green building financing risk and commercial model as well as capacity building on green building financing for the Bank’s staff, (ii) green building and mortgage financing awareness raising activities, including EDGE certification, within the Bank’s clients, and (iii) general support in the identification of currently unidentified green transactions within the Bank’s portfolio.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	90.0
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
Quasi-Equity	Loans to SME Borrowers

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

Development Impact

The Project is expected to have a significant Stakeholders impact by aiming to increase access to finance to SMEs in Ecuador, as almost 31% of SMEs are fully or partially credit constrained. The Country's SME finance gap is estimated at US$15.6 billion, which is 16% of GDP. The Project also aims to increase and foster the development of climate smart projects. Ecuador ranks 7th in CO2 emissions in LAC and has committed through the Intended Nationally Determined Contributions to reduce GHG emissions by 25%. Additionally, the Project is expected to have a significant contribution to market creation through Integration, as the Project is anticipated to be the first green bond to be issued by a bank in Ecuador and will therefore have a demonstration effect for climate smart and sustainability-focused projects through banking institutions, further contributing to greater deepening of financial and capital markets in Ecuador.

E&S Category Rationale / Risks and Mitigation

The proposed investment consists of an investment of approximately US$50 million as part of the Bank’s green bonds program and a US$20 million investments in a subordinated loan targeted to support the Bank’s SME portfolio. Sectors to be supported include: commercial, industry, services, agriculture, construction, renewable energy, among others. The portfolio includes 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. While some activities supported in these sectors might have higher risks and impacts hydropower, Category A, and coal-related projects are excluded from the project. Therefore, this project has been categorized as FI-2 in accordance with IFC’s Sustainability Policy. For this project, Pichincha will be required to continue applying its ESMS, which ensures screening against the exclusion list and compliance with local regulation for SME loans. The Bank will apply IFC Performance Standards to transactions under the green bond depending on their E&S risks.

The key E&S risks and impacts derive from Banco Pichincha’s capacity to identify and manage the potential environmental and social risks associated with its SME lending activities, in particular those in the agribusiness and manufacturing sectors, and projects financed by the green bond (i.e. green building construction, solar, wind, biomass). E&S risks on these types of projects typically include: occupational health and safety, pollution prevention, waste and wastewater management, labor and working conditions. Some agribusiness projects have the potential for: deforestation, natural habitat conversion, forced and child labor, among others. No high-risk projects, coal-related projects and hydropower plants will be financed by the green bond. The Bank has a well-developed ESMS to manage risks on its SME portfolio and will enhance it to address risks of projects financed by the green bond. As part of this project, the Bank will: (i) continue to screen transactions against the exclusion list and local regulations, and (ii) enhance its ESMS and develop adequate capacity to apply IFC Performance Standards when applicable. It will also continue its commitment to applying its current labor standards, which are aligned with the requirements of PS2: Labor and Working Conditions.

Contacts

For Inquiries About the Project, Contact

Banco Pichincha
Eduardo Urgiles
Head of Treasury
(593 2) 2 980-980
eurgiles@pichincha.com
Av. Amazonas y Pereira
www.pichincha.com

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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/
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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.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

Task Title & Description	Anticipated Completion Date
Enhance its ESMS	12/31/2019
Deliver a staff training plan	12/30/2019
Implement an External Communication Mechanism (ECM)	06/30/2019

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