41828 - Republic Bank TT

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Summary of Investment Information

Project Number

41828

Company Name

REPUBLIC BANK LIMITED

Date SPI Disclosed

Jan 31, 2019

Country

Trinidad and Tobago

Region

Latin America and the Caribbean

Projected Board Date

Mar 15, 2019

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Jun 28, 2024

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Apr 4, 2019
Signed : Apr 8, 2019
Invested : Sep 26, 2019

Sector

Commercial Banking - Housing Finance

Project Description

The proposed project (“the Project”) consists of a subordinated debt of up to US$75 million to Republic Bank Limited (“RBL” or “the Bank”) in Trinidad and Tobago (“T&T or “the Country”) structured as a 7-year bullet loan. The main purpose of the loan is to strengthen RBL’s capital base and to support the growth of the Bank’s mortgage loan portfolio in T&T.

Associated Advisory Engagement

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	75.0
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
Quasi-Equity	Housing Finance

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

Development Impact

Project Outcomes (i) Stakeholder Effects: (a) Increased access to residential housing finance: Due to the continued growth in housing demand, most recent estimates indicate a shortage of more than 100,000 units, which is significant for a country with a population of less than 1.4 million; and (b) Increased affordability in housing finance: In T&T wages have not been able to keep pace with the sharp increases in housing prices; thus, households' purchasing power has significantly eroded. For the last two decades the housing affordability ratio in T&T has been at 10:1 vs. international rates of median housing, where a ratio above 4:1 indicates a serious lack of affordability. In this context, RBL is expanding its focus on catering to the middle-income segments where affordability has historically been a major barrier to home ownership. (ii) Economy Wide Effects: Many of the mortgages supported by the Project are expected to finance new homes; hence, the impact on jobs could be significant. The IFC model estimates the creation of approximately 2.7 jobs per newly built housing unit financed and the value-added impact per housing unit financed to be approximately US$165,000. Contribution to Market Creation (i) Competitiveness: Given that RBL is the largest player in the banking sector, the Project will support the Bank as they continue their expansion strategy into the middle-income residential mortgage market, which is expected to contribute to changing the banking sector's risk perception of the segment. Over time other financial institutions will replicate RBL's approach and cater to the growing housing finance demand from middle-income borrowers.

E&S Category Rationale / Risks and Mitigation

The Project will support activities with low E&S risks and has been classified as a Category FI-3 project in accordance with IFC’s Environmental and Social Sustainability Policy. The Project’s proceeds will be used for on-lending to residential mortgage borrowers for purchasing residential homes and will not be used for any builder/construction finance. RBL will be required to comply with the requirements of Performance Standard 2 on labor and working conditions.

Contacts

For Inquiries About the Project, Contact

Republic Bank Limited
Parasram Salickram
General Manager, Planning & Financial Control
868-625-3617
parasram.salickram@rfhl.com
9-17 Park Street, Port of Spain, Trinidad and Tobago
www.republictt.com

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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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