43969 - BML Loan I

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Summary of Investment Information

Project Number

43969

Company Name

BANK OF MALDIVES PLC

Date SPI Disclosed

Jun 30, 2020

Country

Maldives

Region

South Asia

Projected Board Date

Jun 29, 2020

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Oct 4, 2024

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Jun 26, 2020
Signed : Jun 30, 2020
Invested : Aug 31, 2020

Sector

Commercial Banking - General

Project Description

The proposed project consists of a senior secured loan of up to US$50 million and a potential mobilization of up to US$50 million to Bank of Maldives (“BML or “the Bank”), a state-owned bank in the Maldives (“Project”). The proposed investment will be in the form of a USD senior secured loan to BML with a tenor of up to 3 years. The investment is in response to the crisis caused by the coronavirus (“COVID - 19”) global pandemic which has adversely impacted the tourism industry, resulting in a liquidity crunch in related sectors. The proposed IFC funding will be on-lent by the Bank through working capital loans to support companies and SMEs in the tourism and services sectors in the Maldives, which have been impacted due to COVID-19.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
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 Corporates
Straight Senior Loan	Loans to SME Borrowers

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

Development Impact

Stakeholders impact: The Project will provide the financing required to support the tourism-related businesses, including those SMEs in the tourism value chain, with their working capital requirements, and to expedite their post crisis recovery. The Bank has designed a working capital financing program to support the sector in the wake of the COVID-19 crisis, and the Project will extend the Banks's effort to this critical sector, which would, in turn, have a positive cascade to related value chains. Market Impact: BML is the largest bank in Maldives and has significant presence across the economy, reaching the majority of private sector in the critical tourism sector. By supporting the largest financial institution for the private sector, the Project is supporting market resilience during the COVID-19 pandemic. The Project will help preserve the financial sector's ability to support the economic recovery effort as conditions normalize.

Financial Structure: The financing structure is tailored to the current economic and regulatory conditions. It will be deployed as a 3-year USD fixed rate loan with a principal grace period of 1-year, semi-annual amortization to be on-lent to underlying borrowers in the tourism and related sector exclusively for the purpose of working capital needs. The loan shall be disbursed in tranches. The proposed IFC funding will be used to extend a crisis response program that the Bank has designed to finance severely impacted businesses in the tourism and related services sectors in the Maldives (including SMEs in the tourism value chain).. Resource Mobilization: The Project may mobilize up to US$50 million through either non agented parallel loans/B Loans to BML from other lenders which will sustain the Bank's capacity to disburse loans to their customers. Standard Setting: IFC will support the Bank in the development and implementation of an E&S risk management system in line with good international practice. In addition, IFC will also work with the bank to develop a Corporate Governance Improvement Plan and provide support to the Bank to improve to international standards.

Indicator	Metrics	Comments	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
CORE - E and S Management Systems (Y/N)	Compliance/Enhancement		Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

The bank is mainly involved in lending long and medium-term products for corporate and SME clients, such as working capital, long term loans, overdrafts, and several short-term products. Key sectors of exposure in non retail segment includes tourism (including resorts), and real estate construction, followed by support sectors like wholesale and retail trading and transportation. The IFC loan will support the Bank in its short-term lending to sub-borrowers in tourism sector (primarily corporate clients) and support services sector (primarily SMEs). IFC funds will not be used to support any coal-related activities. Higher risk business activities that could include significant Occupational Health and Safety risks or impacts on the environment, community health and safety, biodiversity, cultural heritage, involuntary resettlement or risk of adverse impacts on Indigenous Peoples will be excluded from the facility. No new resort development, expansion or green field project/ acquisition will be supported under the IFC loan. Hence, the E&S risk of the proposed investment is medium, and the project is categorized as FI-2. The applicable Performance requirements will be i) the IFC- FI Exclusion List; and ii) the relevant host country E&S laws and regulations.

The key E&S risks and impacts derive from the bank's capacity to manage the potential environmental and social risks associated with the financing to tourism sector as supported by the IFC loan. The typical risks and impacts in the tourism sector as proposed under the IFC loan will be limited and site specific (e.g. related to occupational health & safety, emergency response, waste-water discharge, labour, and impact on marine ecosystem etc.). To meet the requirements of this project, the bank will develop and implement an Environmental and Social Management System (ESMS) including an E&S risk screening procedure in consultation with IFC. It will also nominate an E&S officer who will be responsible for implementing the ESMS. The bank has adequate HR policies in line with IFC Performance Standard - 2 requirements and it is in the process of upgrading its HR policies in line with the recent changes in country laws. The bank will ensure that the upgrades are aligned with IFC Performance Standard -2 requirements.

Task Title & Description	Actual Due Date	Status	Completion Date
Nominate officers		Completed	06/30/2020
Establish SEMS		Completed	06/30/2020
Staff Training	06/30/2021	Completed	07/30/2020
Other1 Update HR policy/procedures on HIV screening		Completed	06/30/2020

Contacts

For Inquiries About the Project, Contact

Bank of Maldives PLC
Nandana Senevirathne
Chief Financial Officer
+960 333 0243, Mob: +9607994331
nandana@bml.com.mv
20094 Boduthakurufaanu Magu, Male, Maldives
https://www.bankofmaldives.com.mv/

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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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