46172 - DCM CSB Gender

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Summary of Investment Information

Project Number

46172

Company Name

CITY SAVINGS BANK, INC.

Date SPI Disclosed

Feb 13, 2024

Country

Philippines

Region

East Asia and the Pacific

Projected Board Date

Mar 13, 2024

Environmental Category

FI-3 - No Impact

Status

Active

Last Updated Date

Jun 22, 2024

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Mar 13, 2024
Signed : May 28, 2024
Invested : Jun 20, 2024

Sector

Commercial Banking - General

Project Description

The proposed investment is an up to US$100 million or in PHP equivalent own account investment in a senior, unsecured, fixed rate, Gender Bond or Loan (subject to regulatory approvals) to be issued by CSB with a tenor of 3 to 5 years. City Savings Bank, Inc. (“CSB or CitySavings”) is seeking to raise up to US$200 million equivalent (inclusive of the IFC investment amount) in total; IFC will aim to mobilize the financing gap of US$100 million. The bond is expected to be aligned with International Capital Markets Association (ICMA) social bond principles.

Incorporated in 1965, CSB is the 2nd largest thrift bank in the country (in terms of assets) and a subsidiary (99.9% owned) of Union Bank of the Philippines (“UBP” or “UnionBank”). CSB focuses on providing mass market financial products, particularly teacher salary loans, pension loans, government/company salary loans, motorcycle loans, and traditional deposit products. CSB provides its products through its own 149 bank branch network (52% in Luzon ex-NCR, 21% in Visayas, 19% in Mindanao, and 11% in NCR) and 3,380 branches and sub-agents of its affiliate entity, PETNET.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	100.0
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	Consumer Loans

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

Development Impact

Increased access to finance for individuals: The Project is expected to help CSB to grow its salary loan portfolio, majority of whom are female and workers in the lower-middle income segment. This will increase access to financing for these underserved individuals, and consequently increase access to essential products and services such as housing, education, medical, and funds for business. Integration: At the market level, IFC anticipates that the project will lead to better integration between the capital markets and thrift and rural banking institutions through innovation, demonstration, and replication channels.

Financing structure: IFC will provide CSB with medium-term funding, and help improve asset-liability matching of CSB by helping it gain further access to medium-term funding. Furthermore, if a bond, IFC will invest in CSB’s first thematic bond issuance. The bond will adhere to ICMA’s social bond principles. Resource mobilization: As the anchor investor, IFC is expecting to mobilize up to US$100 million from parallel lenders, mainly partner development finance institutions and international financial institutions, bringing in additional financing and supporting the diversification of CSB’s funding sources. Non-commercial Risk Mitigation: The thrift and rural banking industry in the country has been able to access the capital market due to either perceived or actual regulatory pushback in the past. IFC, given its reputation in the market as an investor, its signaling function, as well as its due diligence, will help mitigate non-commercial risk and signal the commercial viability of the Project to other investors, increasing the success of CSB’s first bond issuance.

E&S Category Rationale / Risks and Mitigation

The Project entails an IFC investment in a gender bond or loan of CSB of up to US$100 million or in PHP equivalent to support individuals. CSB focuses on providing mass market financial products, particularly teacher salary loans, pension loans, government/company salary loans, motorcycle loans, and traditional deposit products. The project presents limited to no Environmental & Social risks and the project has been categorized as FI-3 in accordance with IFC’s Environmental and Social Sustainability Policy. The project will not support coal related or higher risk activities that may involve 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, d) risk of significant retrenchment or e) significant Occupational Health and Safety risks. CSB has adequate HR policies which are in line with IFC Performance Standard 2 requirements and follows the applicable Life and Fire Safety requirements in its own operations.

Contacts

For Inquiries About the Project, Contact

City Savings Bank
Raquel Palang
Senior Vice President and Treasurer
(632)-8548-2500
raquel.palang@citysavings.com.ph
UnionBank Plaza, Meralco Avenue corner Sapphire and Onyx Streets, Ortigas Center, Pasig, Metro Manila, Philippines
https://www.citysavings.com.ph/

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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.

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Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

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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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