47461 - WCS Crisis Response Prime Bank II

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Summary of Investment Information

Project Number

47461

Company Name

PRIME BANK PLC.

Date SPI Disclosed

Dec 9, 2022

Country

Bangladesh

Region

South Asia

Projected Board Date

Dec 16, 2022

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Jan 11, 2023

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Dec 16, 2022
Signed : Dec 28, 2022
Invested : Jan 9, 2023

Sector

Commercial Banking - General

Additional Project Attributes

Blended Finance

Project Description

The proposed Project is an up to US$50 million Working Capital Solutions (WCS) facility to be extended to Prime Bank Limited (“Prime Bank” or the “Bank”) in Bangladesh, under the ‘Fast Track COVID-19 Facility’ (FTCF) umbrella. This proposed Project is structured as a one-year facility, renewable for additional two years, for a maximum aggregate tenor of three years. This Project will support working capital, trade finance and foreign exchange liquidity needs of the sub-borrowers (export/import-based enterprises) through Prime Bank’s Off-Shore Banking Unit. A portion of the IFC loan proceeds is expected to be earmarked to support Prime Bank’s climate-eligible working capital and trade-related transactions as per IFC’s eligibility criteria.

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	Trade

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

Development Impact

The Project will contribute to increasing US$ funding for export/import-based enterprises and will also extend climate-eligible trade finance support. At the market level, IFC will contribute market resilience through providing liquidity support to leading banks and strengthen their ability to absorb shocks imposed by current stress situation as well as sending a positive signal to the market attracting additional international investors to support market liquidity in Bangladesh.

IFC’s additionality is driven by the countercyclical role leveraging on its successful experience in rapid crisis response and ability to deploy at scale, and contribute to enhancing the resilience of the trade finance market in Bangladesh. Through this Project, IFC will be offering US$ liquidity support amidst prevailing global economic headwinds and support the Bank in catering to working capital and trade related needs of its clients.

E&S Category Rationale / Risks and Mitigation

The project will support Prime Bank in increasing its lending to small and medium enterprises (SME) and medium-low and low risk corporates through short-term working capital loans and FX trade-related lending under the COVID-19 facility. Prime's corporate and SME portfolio mainly comprises businesses engaged in the readymade garments and textile sector, wholesale/retail trading, pharmaceutical companies, small scale manufacturing, and small and medium sized construction companies engaged in commercial and residential projects. These industry sectors present medium-low Environmental & Social ('E&S') risks and impacts which are readily manageable. The typical risks areas include labor and working conditions, occupational health and safety, supply chain risk including child labor and forced labor, air emissions, waste management, and handling of hazardous materials, in the corporate and SME borrower's operations. Given the proposed use of proceeds, this project will not support coal-related activities and higher risk business 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 or d) significant Occupational Health and Safety risks. Hence, the project is categorized as Category FI-2 in accordance with IFC Sustainability Policy. The E&S requirements will include IFC Exclusion List, additional list of restricted commodities and relevant national E&S laws and regulations.

The key risks are related to the ability of the bank to identify and manage environmental and social risks associated with its lending activities, in particular lending to corporate clients. Additional E&S risks and impacts of the bank derive from the capacity and systems in place to manage these risks. This is an existing client with an existing E&S risk management system (ESMS) and E&S officer responsible for the ESMS implementation. The ESMS details screening against IFC Exclusion List and restricted commodity list and includes due diligence procedures for assessment of compliance with relevant national E&S laws and regulations for its entire lending operations. As defined by the latest Environmental and Social Risk Management Guidelines of Bangladesh Bank (the central bank of Bangladesh) the ESMS will be required to be upgraded to include sectors specific E&S requirements. The upgraded ESMS will also include assessment tools (e.g., labor and working conditions, etc. for industry specific E&S due diligence). The bank's HR policies are aligned with performance standard 2 on labor and working conditions.

Task Title & Description	Actual Due Date	Status	Comments	Completion Date
Other1 Upgrade ESMS	03/20/2023	Completed		01/31/2023

The Bank has developed and implemented a satisfactory ESMS. The ESMS details screening against IFC Exclusion List and restricted commodity list and includes due diligence procedures for assessment of compliance with relevant national E&S laws and regulations for its lending operations. The Bank has upgraded its ESMS and included sector-specific ESDD requirements and relevant assessment tools aligned with Bangladesh bank (the central bank of Bangladesh) requirements.

Contacts

For Inquiries About the Project, Contact

PRIME BANK LIMITED
Syed Faisal Omar
Senior Executive Vice President & Head of Financial Institutions
+88 02 55068680
faisal.omar@primebank.com.bd
'Simple Tree Anarkali', Level-3, 89, Gulshan Avenue, Dhaka - 1212
www.primebank.com.bd

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