47350 - DCM Itau Social

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Summary of Investment Information

Project Number

47350

Company Name

ITAU UNIBANCO SA

Date SPI Disclosed

Feb 24, 2023

Country

Brazil

Region

Latin America and the Caribbean

Projected Board Date

Dec 8, 2022

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Feb 24, 2023

Department

Regional Industry - FIG LAC

Industry

Financial Markets

Previous Events

Approved : Dec 8, 2022
Signed : Dec 12, 2022
Invested : Dec 15, 2022

Sector

Commercial Banking - General

Additional Project Attributes

Blended Finance

Project Description

The proposed investment (the Project) consists of the subscription by IFC of a 3.3-year senior social unsecured bond to be issued by Itaú Unibanco S.A. (“Itaú or the “Bank”) through a local financial instrument denominated “Letra Financeira” (LF), up to the equivalent in Brazilian Real (BRL) of US$200 mm. Itaú will also do its best efforts to issue additional senior social unsecured bonds up to the equivalent in Brazilian Real (BRL) of US$200 mm, to be subscribed by additional investors. The LFs will be issued under Itaú’s Sustainability Finance Framework and will support the Bank’s lending program to Women-Owned micro, small and/or medium enterprises (WMSMEs) with a 10% carveout to the WMSMEs located in the underserved regions of the North and Northeast of Brazil.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	201.80
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 Woman-Owned SMEs

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

Development Impact

The most significant, expected Project-level outcome is increased access to finance for WSMEs, in particular women entrepreneurs located in the North and Northeast regions of Brazil. Beyond the Project, IFC anticipates that the engagements with the largest bank in Brazil will promote greater market inclusiveness by encouraging other banks to increase their footprint in underserved regions and segments, as well as to issue gender-themed instruments to support WMSMEs.

IFC’s additionality in the Project is both financial and nonfinancial. Financial additionality will be provided in the forms of: (i) financing structure, provided in the form of innovative financing structure as IFC will support Itaú in structuring the bonds; and (ii) resource mobilization, as IFC will play an anchor role in bringing additional investors to the Project. Nonfinancial additionality will be provided in the form of the existing advisory services engagements, as IFC will continue supporting the Bank to strengthen its WMSME clients and their businesses, with a special focus on Afro-descendant women entrepreneurs from the North and Northeast of Brazil.

E&S Category Rationale / Risks and Mitigation

The Project consists of the subscription to a senior social unsecured bond of up to US$200 million to support Itaú's lending to WSMEs, with a 10 percent target to underserved regions of the North and Northeast of Brazil. Itaú's WSMEs portfolio does not have a significant concentration on higher E&S risk sectors and is composed mostly of short-term financing in the services sectors. The potential E&S risks and impacts associated with the project are likely to be of a medium to low nature, therefore, this transaction has been categorized as FI-2 according to the IFC Sustainability Framework. To manage and avoid risks, in addition to maintain Itaú's ESMS, 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 primary agriculture subprojects and coal-related activities.

Itaú is an Equator Principles signatory since 2004, with ESMS procedures and E&S capacity been revised annually and continuously strengthened since 2007. In January 2021, the Group launched its Sustainability Finance Framework, applicable to Social, Green and Sustainability bonds or loans to be issued by Itaú and its affiliates to finance existing or future Investments that meet Itaú's Eligibility Criteria. Itaú's Eligibility Criteria for WSME loans follow IFC's revenue definition and the Social Bond Principles, 2018 (SBP) administered by International Capital Markets Association (ICMA). For the WSME portfolio, procedures are in place and include screening against Itaú's prohibited activities list, which matches the IFC list, as well as screening against host country laws, as applicable, through legal claims and the affirmative E&S covenants in the sub-loan agreements. As part of the Project, the Bank will be required to: (i) maintain its ESMS procedures to screen SMEs against the applicable requirements; (ii) remain committed to applying the labor standards established by IFC's performance standard; and (iii) submit a periodic report to IFC.

Contacts

For Inquiries About the Project, Contact

Itaú Unibanco S.A.
Treasury – Structuring & International Financial Institutions
N/A
+55 11 3708-2669
structuring@itau-unibanco.com.br
Av. Brigadeiro Faria Lima,3.400 | 3º andar | São Paulo – SP | CEP 04538-132
https://www.itau.com.br/relacoes-com-investidores/

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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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