43293 - Santander CH RSF

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Summary of Investment Information

Project Number

43293

Company Name

BANCO SANTANDER CHILE

Date SPI Disclosed

Dec 28, 2019

Country

Chile

Region

Latin America and the Caribbean

Projected Board Date

Dec 17, 2019

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 11, 2022

Department

Regional Industry - FIG LAC

Industry

Financial Markets

Previous Events

Approved : Dec 17, 2019
Signed : Dec 20, 2019

Sector

Commercial Banking - Trade

Project Description

The proposed investment (the “Project”) is a 50-50% unfunded risk sharing facility with Banco Santander Chile (“Santander” or the “Bank”) on a portfolio of trade-related assets for up to US$300 million and an availability period of 3 years. As part of the Project, Santander Chile will retain at least 50% of the total portfolio exposure, while IFC will take the risk of the remaining 50% or up to US$150 million. The Project will provide Santander with a risk mitigation tool which will allow the Bank to preserve capital for a portion of its trade-related assets. The total capital conserved per annum will be redeployed to generate up to US$150 million to finance climate-related and small and medium enterprises (“SMEs”) portfolio.

Associated Advisory Engagement

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	150.0
Loan
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
Guarantee	Climate (not covered in any category)
Guarantee	Loans to SME Borrowers

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

Development Impact

The most significant, expected Project-level effect is increased access to climate finance and SMEs. Beyond the Project-level impacts, IFC anticipates that the investment will promote competitiveness of climate financing market by enabling Santander, a large private sector bank, to grow its business in this space, which demonstrates to the market a replicable solution and encourages private sector FIs to invest in climate-related business and to expand lending to SMEs.

Through the Project, IFC provides both financial and non-financial additionalities: i) Financing Structure; and ii) Standard Setting. IFC's participation will enable Santander Chile to redeploy its capital in a more efficient use for climate finance investments while at the same time sustaining its capacity to provide stable trade finance to underlying exporters and importers. Through the implementation of climate assessment tool, IFC also helps the Bank to adopt best practices and standards.

E&S Category Rationale / Risks and Mitigation

The Project consists of an US$150 million risk sharing facility with Banco Santander Chile on a portfolio of trade-related assets that will allow the Bank to redeploy capital to support Sustainable Energy Finance (SEF) subprojects and SMEs. Because higher E&S risk activities will be excluded, the potential E&S risks and impacts associated with the Project are likely to have primarily medium E&S risks, therefore this transaction was categorized as FI-2 according to IFC’s Sustainability Framework. As part of the Project, Banco Santander Chile will be required to screen its trade transactions against the exclusion list and other E&S risks, SME sub-projects against the IFC exclusion list and Chilean E&S laws and regulations, and SEF sub-projects against the same criteria as SMEs along with Performance Standards.

The key risks and impacts derive from the portfolio of supported activities and the Bank’s capacity to identify and manage the potential E&S risks associated with such activities. Santander Chile’s SME and trade portfolios E&S risks are mainly related to pollution prevention, resource efficiency and occupational health and safety in agricultural activities. As for the SEF pipeline, risks are associated to potential impacts during project construction and operation such as impacts on biodiversity (wind), access to water (solar), affected communities and indigenous peoples. To manage and avoid these risks, in addition to improvements in Santander Chile’s ESMS and support from Santander’s global E&S team, 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. Also excluded are hydropower subprojects and coal-related activities. Santander Chile is a subsidiary of the Santander Group. The group is an Equator Principles signatory and an existing IFC client with projects in Brazil and Mexico. Santander Chile’s ESMS procedures are being strengthened and implemented with the support of Santander’s Global E&S team. As part of the Project, the Bank will be required to: (1) enhance its ESMS procedures to screen Trade, SME and SEF sub-projects against the applicable requirements; (2) remain committed to applying the labor standards established by the IFC Performance Standards; and (3) submit a periodic report to IFC. For SEF projects assessment, Santander Chile will rely on a dedicated E&S officer as well as on the support from Global E&S team.

Contacts

For Inquiries About the Project, Contact

Santander Chile
Patricia Perez Pallacan
Head of Capital Management
+56 2 2320 3131
patricia.perez.pallacan@santander.cl
Bandera 140, 19th Floor
https://santandercl.gcs-web.com/

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Task Title & Description	Anticipated Completion Date
Nominate officers	12/31/2019
Enhance ESMS	12/31/2019
Implement ESMS enhancement	06/30/2020

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