44083 - Banco BHDL WCS

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Summary of Investment Information

Project Number

44083

Company Name

BANCO MULTIPLE BHD SA

Date SPI Disclosed

Jun 25, 2020

Country

Dominican Republic

Region

Latin America and the Caribbean

Projected Board Date

Jun 19, 2020

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Aug 10, 2021

Department

Regional Industry - FIG LAC

Industry

Financial Markets

Previous Events

Approved : Jun 26, 2020
Signed : Jun 30, 2020
Invested : Jul 15, 2020

Sector

Commercial Banking - Trade and Supply Chain

Project Description

The proposed investment consists of a one-year, renewable , senior loan for up to US$60 million to Banco Múltiple BHD León, S.A. (“BHDL” or “the Bank”) in the Dominican Republic (the “DR” or the “Country”) under the FIG COVID-19 Emergency Response WCS Envelope (WCS Envelope). The WCS Envelope is designed to provide funding to existing IFC client banks in emerging markets that will then extend new trade-related or working capital loans to companies whose cash flows have been disrupted by the global outbreak of the coronavirus pandemic. The proposed investment intends to support a strategic partner and a leading financial institution in the Country, by supporting the Bank's working capital and trade-related lending programs to DR enterprises, primarily small and medium enterprises (“SMEs”) as a result of the COVID-19 pandemic.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	60.0
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

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

Development Impact

Under the COVID-19 Facility, the project's development thesis is: by supporting its clients' capacity to sustain operations during this acute shock, IFC best positions the private sector to support the economic recovery process, shortening the time it will take for the most vulnerable to return to their traditional income-earning opportunities. The expected project-level outcome is providing access to finance/liquidity to relevant stakeholders (emerging markets "EM" and financial institutions "FI", and through them, their customers). This will support stakeholders' capacity to sustain operations and to expedite post-crisis recovery. Specifically, this project intends to provide increased access to working capital finance primarily for SMEs. Beyond the project-level outcomes, EM banks provide working capital and trade finance to support their customers' operating cash flows. By sustaining the Bank's ability to provide these services, the project intends to promote the resilience of trade finance markets as well as broader stability that comes about by providing for the going concern of market participants in the Dominican Republic.

Additionality is driven by IFC's counter-cyclical role during crises, especially at a time when other lending institutions or investors' appetite may be subdued. Therefore, IFC's additionality arises from its unique ability to deploy at scale, in terms of volume as well as geographic reach, through its (i) successful experience in rapid crisis response; (ii) extensive client bank and partner networks; and (iii) set of programs aimed at investing both large scale, transactional liquidity and working capital in emerging markets.

E&S Category Rationale / Risks and Mitigation

BHDL is an existing client with satisfactory performance (ESRR: 2). The Bank provides financial services and products to (individuals, SME and Corporate clients) in the Dominican Republic in a wide range of sectors, including potentially high-risk sectors such as large-scale agriculture and construction. Other sectors financed include – services; commerce; industry/manufacturing; hotels and restaurants; transportation and electricity distribution. The proposed investment consists of a one-year, renewable up to two years, senior loan of up to US$60 million to support the Bank's working capital and trade-related lending programs to DR enterprises, primarily small and medium enterprises (“SMEs”) as a result of the COVID-19 pandemic. Overall environment and social risks and impacts associated with the lending activities are considered limited, therefore the proposed project has been categorized as FI-2 in accordance with IFC’s Policy on Environmental and Social Sustainability. The identified applicable requirements for this project are the IFC Exclusion List, the applicable national environmental and social laws in Dominican Republic and the IFC Performance Standards.

The main E&S risks and impacts relate to the ability of the bank to identify and manage the E&S risks associated with its lending activities , as well as the bank’s labor standards. The potential E&S risks associated with the sectors financed by the bank include E&S management capacity; labor standards – occupational, health and safety and terms of employment; pollution management; and in some sectors broader impacts on the surrounding environment (biodiversity) and local communities. Coal-related activities will not be eligible. Higher risk companies will not be eligible, such as those involved in: 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.

Summary of Client Environmental and Social Management System (ESMS)

Recent ESMS improvements include the assessment of E&S risks for medium risk clients (previously done only for high and medium-high risk clients), the piloting of labor risk assessments in the construction sector, and the implementation of an External Communication Mechanism for receiving and addressing E&S concerns raised about projects financed by BHDL. As part of the Project, the Bank will be required to: (1) maintain its ESMS procedures; (2) remain committed to applying the labor standards established by the IFC Performance Standard; and (3) submit a periodic report to IFC.

Contacts

For Inquiries About the Project, Contact

Banco Múltiple BHD Leon, S.A.
Mr. Fidelio Despradel
Senior Vice President
+1-809-243-3232

Santo Domingo, Dominican Republic
www.bhdleon.com.do

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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.

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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.

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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.

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