47695 - Bradesco Create

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Summary of Investment Information

Project Number

47695

Company Name

BANCO BRADESCO S.A.

Date SPI Disclosed

Aug 24, 2023

Country

Brazil

Region

Latin America and the Caribbean

Projected Board Date

Sep 25, 2023

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Oct 20, 2023

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Sep 25, 2023
Signed : Sep 29, 2023
Invested : Oct 18, 2023

Sector

Commercial Banking - SME Finance

Project Description

The Project’s objective is to support lending to micro, small and medium enterprises (“MSME”) operating within regional productive clusters (“APL”, for Arranjos Produtivos Locais) in Brazil, through Banco Bradesco S.A. (the “Bank” or “Bradesco”). Addressing the lack of access to finance for MSMEs is a strategic priority for IFC as it is considered a constraint to shared prosperity and poverty reduction. The Project will also target MSMEs in the North and Northeast regions of Brazil, and MSMEs operating in Creative Industries (“CI”), which include industries that use culture and creativity as their main input to produce functional outputs with commercial value. The Project will continue to support an existing relationship between IFC and Bradesco, one of the leading financial groups in Latin America with an extensive footprint in the MSME segment and in the Brazilian economy.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	250.0
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 MSME (mix of Micro and SME)

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

Development Impact

IFC anticipates that the Project will contribute to narrow Brazil's MSME finance gap by enabling Bradesco to increase its financing to MSME operating within the APLs ecosystem. MSMEs are crucial for the development of Brazil’s economy. However, the MSME finance gap is estimated at US$483 billion or 27% of GDP as estimated by the SME Finance Forum. In addition, a part of the proceeds is expected to be on-lent to MSMEs operating in CI. Last, IFC expects that the successful expansion of lending to MSMEs with the proposed regional and industry focus by a market leader in Brazil will increase competitiveness in the lending market, by generating a positive demonstration and encourage replication by other banks.

IFC’s additionality is both financial non-financial and consists of (i) financial structure as IFC will provide a longer-tenor than what is widely available in the current environment of the Brazilian financial markets; and (ii) Knowledge, Innovation and Capacity Building, as IFC will support the Bank in building and expanding its CI portfolio through identifying, monitoring, and reporting.

E&S Category Rationale / Risks and Mitigation

The proposed project will support Banco Bradesco MSME activities focused on its local productive arrangements (APL) portfolio and a target of 25% of the loan to be on-lent to eligible MSMEs operating in Creative Industries (CI). APLs are Brazilian government certified cluster activities organized in a given territory working predominantly around a specific productive activity. CI are defined as those industries that use culture and creativity as their main input to produce functional outputs with commercial value. Main segments include Fashion & Design, Audio-Visual Media, Visual Arts, Creator Economy and Disruptive Tech, Culinary Arts, Performing Arts and education for the creative sector, among others. Bradesco's MSME portfolio represents approximately 23.6% of the bank’s credit operations. Eligible MSMEs operating within the APL segment represent 1% of the Bank’s loan portfolio, with average transaction size of approximately USD 30 thousand. Coal related, wood segment sub-projects or high risks Category A type of projects, will not be eligible. The potential E&S risks associated with the project are expected to be of a medium nature, therefore the Project has been categorized as FI-2 according to the IFC’s Sustainability Policy.

Bradesco is an existing client with an E&S Management System in place in line with the project E&S Requirements. Key risks and impacts of the project derive from the Bank’s capacity to maintain its ESMS in order identify and manage potential environment and social risks associated with the APL sub-projects. Banco Bradesco is an Equator Principles signatory and has developed an ESMS in line with the Brazilian E&S laws and regulations. As part of the proposed project, the client will be required to: (1) maintain its ESMS procedures to screen sub-projects against the applicable requirements (XL and HC); (2) remain committed to applying labor standards established by the IFC Performance Standard; and (3) submit a periodic report to IFC.

Contacts

For Inquiries About the Project, Contact

Banco Bradesco S.A.
Investor Relations Department
RI
+55 0800 701 1616
investidores@bradesco.com.br
Cidade de Deus, s/nº, Prédio Vermelho, 3º andar. Vila Yara, Osasco, SP. Brazil
www.bradescori.com.br

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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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