43239 - BA Loan

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Summary of Investment Information

Project Number

43239

Company Name

BANCO AGRICOLA S.A.

Date SPI Disclosed

Apr 30, 2020

Country

El Salvador

Region

Latin America and the Caribbean

Projected Board Date

Jun 30, 2020

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Aug 10, 2021

Department

Regional Industry - FIG LAC

Industry

Financial Markets

Previous Events

Approved : Aug 6, 2020
Signed : Aug 25, 2020
Invested : Aug 31, 2020

Sector

Commercial Banking - SME Finance

Additional Project Attributes

Blended Finance

Project Description

The proposed investment consists of: 1) a senior financing package of up to [US$300] million to Banco Agricola. S.A in El Salvador, comprising of: (i) an up to [US$150] million senior unsecured “A” loan for IFC’s own account (IFC A Loan), (ii) a loan of up to [US$50] million from IFC acting in its capacity as implementing entity for the Managed Co-Lending Portfolio Program (MCPP); and (iii) and up to [US$100] million mobilization package through a B Loan (under IFC’s standard B Loan program) and/or Parallel loan facility (in which IFC will act as the arranger for the investment on behalf of the parallel lenders); and 2) an up to [US$30] million senior unsecured A loan under the Working Capital Solution (WCS) facility for IFC’s own account. The purpose of the investment is to support the growth of the Bank’s i) small and medium enterprise (SME), including women-owned SMEs (WSMEs), ii) climate-related assets (including green buildings) and iii) housing portfolios (the “Project”).

Associated Advisory Engagement

IFC’s Climate Finance

The climate finance advisory engagement with Banco Agricola will support the Bank in expanding and diversifying its operations in climate finance and further developing the green building business in the country.

IFC’s Banking on Women (BOW)

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	180.0
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
Straight Senior Loan	Loans to SME Borrowers
Straight Senior Loan	Climate (not covered in any category)
Straight Senior Loan	Loans to Woman-Owned SMEs

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

Development Impact

Financial Additionality: Financing Structure/resource mobilization. IFC will help constitute a structure which is not readily available in the market, mobilizing fund from International Investors. Non-Financial additionality: Knowledge, innovation and capacity building. The climate initiative will support the Bank in expanding/developing its operations in climate finance in the country.

E&S Category Rationale / Risks and Mitigation

The proposed Project will support housing finance for individual customers, climate related assets financing, and SME lending in El Salvador. Climate-related assets financing will include sub-projects related to renewable energy (excluding hydro and wind), green buildings, energy efficiency, and water efficiency. The overall risks of the sub-projects to be supported are primarily low to medium, although some individual subprojects may have higher E&S risks. Therefore, the project has been classified as Category FI-2 according to the IFC's Sustainability Framework.

The environmental and social (E&S) risks of the Project derive from Banco Agricola’s lending activities. Potential risks on the types of sub-projects supported under this transaction may include pollution prevention, waste and wastewater management, labor and working conditions, occupational health and safety issues (especially during construction phase), flooding, impacts to vulnerable nearby communities and biodiversity risks depending on the site selection. Banco Agricola has an existing ESMS and relies on its parent company, Bancolombia, for the review of large corporate and project finance sub-projects. As an existing client of IFC, Bancolombia has a satisfactory ESMS. As part of this project Banco Agricola will update its ESMS to manage the risks of all the asset classes supported by this project, including SMEs, Green Buildings and Climate-related assets. As part of this investment, Banco Agricola will be required to (i) screen activities against IFC Exclusion List and applicable host country E&S laws and regulations, and IFC Performance Standards; (ii) nominate a senior E&S officer who will update, implement and oversee the ESMS, (iii) develop and implement an external communication mechanism, and (iv) submit an annual E&S report to IFC. Additionally, Banco Agricola will follow IFC’s 2012’s Performance Standard 2 – Labor and Working Conditions. The Project will not support any activities with significant E&S impacts such as (a) involuntary resettlement, (b) risk of adverse impacts on indigenous peoples, (c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage, or (d) significant occupational health and safety risks. The Project will not support category A investments, hydropower nor companies operating in the coal sector such as coal mining, coal transportation, coal-fired power plants, or infrastructure services dedicated to support any of these activities.

S.no	Title	Anticipated Completion Date	Status
1	Nominate officers	07/03/2020	Completed
2	Establish SEMS	12/30/2020	Completed
6	Staff Training	12/27/2020	Completed

Contacts

For Inquiries About the Project, Contact

Banco Agricola SA
Graciela Arana
Correspondent Banking Manager
+503 2267 5383
gmarana@bancoagricola.com.sv
Edificio San José de la Montaña, 2° Nivel, San Salvador
https://www.bancoagricola.com/

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