47310 - CIB SL & Subdebt

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Summary of Investment Information

Project Number

47310

Company Name

COMMERCIAL INTERNATIONAL BANK SAE

Date SPI Disclosed

Jul 6, 2023

Country

Egypt, Arab Republic of

Region

Africa

Projected Board Date

Jun 2, 2023

Environmental Category

FI-1 - Significant

Status

Active

Last Updated Date

Jul 6, 2023

Department

Regional Industry - FIG Africa

Industry

Financial Markets

Previous Events

Approved : Jun 2, 2023
Signed : Jun 26, 2023
Invested : Jun 30, 2023

Sector

Commercial Banking - General

Additional Project Attributes

Blended Finance

Project Description

IFC's proposed project consists of an investment package of up to US$250 million to Commercial International Bank (CIB or the Bank), the third largest bank in Egypt and the leading private sector bank by total assets, in the form of; (i) a senior loan of up to US$100 million with a tenor of 5 or 7 year to finance its growing climate finance business, and (ii) a Basel II compliant Tier II (B2T2) subordinated loan of up to US$150 million to support the Bank’s capital position as well as its expansion of its operations (the Project). CIB is a longstanding IFC client and will use the funding and capital support to grow its climate and MSME finance operations. CIB's continued growth in these segments will play a catalytical role in driving their development.

The project is expected to be supported by the Market Accelerator for Green Construction (MAGC) Program as described in the Blended Finance Section.

Associated Advisory Engagement

The new advisory project aims to support CIB in developing its climate risk management framework to ensure its financial stability and regulatory compliance while continuing to support the financing needs of its client base. The technical assistance will include an initial portfolio review, scenario planning, stress testing methodology, and Task Force on Climate-related Financial Disclosures (TCFD) Gap Analysis. This project will ultimately support CIB in laying the foundations for assessing the bank's climate risk exposure and developing strategies for managing and disclosing climate-related financial risks in its portfolio.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	200.0
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	Labeled: Green;Blue;Social-Loans/Bonds
Syndications	Labeled: Green;Blue;Social-Loans/Bonds
Quasi-Equity	Loans to MSME (mix of Micro and SME)

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

Development Impact

The most significant expected Project-level outcomes are increased access to SME and climate finance in Egypt. Beyond the Project, IFC’s programmatic approach to increase MSME financing in Egypt by concurrently pursuing several projects focusing on MSME finance with banks that cover close to 30% of total market share is expected to demonstrate the viability of supporting this underserved segment through the demonstration and replication channel in an environment of devaluations, high interest rates and macroeconomic uncertainty.

IFC’s additionality in this Project is both financial and non-financial. Financial additionality is provided in the form of: (i) financing structure that will provide CIB with long-term funding in foreign currency to help the Bank implement its growth strategy across the MSME and foreign currency capital-intensive climate segments, in light of FCY scarcity in the market given the macroeconomic environment, and (ii) resource mobilization through MCPP. Non-financial additionality is provided in the form of knowledge, innovation, and capacity building through climate risk management advisory to support CIB in managing climate-related risks on its existing portfolio and addressing them by developing climate-risk mitigating strategies.

E&S Category Rationale / Risks and Mitigation

The proposed project consists of senior loan to CIB to support the bank climate finance business, and a subordinated B2T2 loan. The Project has been classified as Category FI-1 according to IFC's Sustainability Policy. CIB's portfolio highest sectors of exposure are petroleum, construction, real estate, tourism, and food and beverage. The applicable Environmental and Social (E&S) requirements for this Project are the IFC Exclusion List, applicable national E&S laws and regulations in Egypt, and the IFC Performance Standards for higher risk transactions. For the sub debt these requirements will be applicable to the entire portfolio of the Bank, while for the senior loan, the requirements will be applicable to the asset class of eligible climate finance projects. CIB will also be required to implement IFC's approach to greening equity investments in financial institutions. In addition, CIB will be required to meet Life & Fire safety requirements and the requirements of IFC's Performance Standard 2 on Labor and Working conditions. The project's key E&S risks and impacts of this project derive from the Bank's capacity to identify and manage potential environmental and social risks associated with its lending activities. The key E&S risks are typically related to occupational health and safety and labor and working conditions, waste and wastewater management, pollution prevention among others. The Bank has a dedicated HR team and established HR policies and manuals generally in line with IFC's labor standards under PS2: Labor and Working Conditions, except for the grievance mechanism. Financial intermediary sub-project disclosure IFC will periodically disclose the names, locations by city and sectors for Category A and/or other qualifying sub-projects that have been supported by the senior loan, subject to regulatory constraints. Any qualifying sub-project(s) will be disclosed during the annual reporting cycle established with the client.

CIB has a functional Environmental and Social Management System (ESMS). The ESMS covers the applicable requirements for each product line, the E&S due diligence and monitoring process, the loan approval process, roles and responsibilities, external communication mechanism, and the sub-project monitoring and reporting requirements. This has been supported by system transformation via the implementation of CIB's sustainable finance institutional pillars including ESMS, Sustainability System integration and Sustainable Finance Strategy, CIB has an E&S Management and Sustainability Systems department, with a dedicated E&S team E&S management function that is in charge of the management and the maintenance of the ESMRS. The bank has also established ESG Risk Management Department within the Institutional Banking Risks Group and is in the process of building up its team to be responsible for assessment and approval of the E&S risks and impacts of the proposed projects and guiding clients in defining adequate E&S management plans. As part of this Project, CIB will be required to update the procedures for assessing risks associated with supply chains. The Bank will also be required to update the existing employee grievance mechanism in line with IFC Performance Standards 2 requirements.

Contacts

For Inquiries About the Project, Contact

Commercial International Bank Egypt
Mrs. Heba Abdel Latif
Head of Financial Institutions Group
+202-37472747
heba.abdellatif@cibeg.com
21/23 Charles De Gaulle St., Giza - P.O. Box 2430 Cairo
www.cibeg.com

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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.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

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.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

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.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

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.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

Task Title & Description	Anticipated Completion Date
Update supply chain procedures	06/18/2023
Update employee grievance mechanism	09/22/2023

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Summary of Investment Information

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Summary of Investment Information

Project Description

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Sponsor / Cost / Location

Project Sponsor and Major Shareholders of Project Company

Total Project Cost and Amount and Nature of IFC's Investment

Blended Finance

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