48063 - Consorcio Loan

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Summary of Investment Information

Project Number

48063

Company Name

Banco Consorcio

Date SPI Disclosed

Aug 18, 2023

Country

Chile

Region

Latin America and the Caribbean

Projected Board Date

Sep 19, 2023

Environmental Category

FI-3 - No Impact

Status

Active

Last Updated Date

Oct 18, 2023

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Sep 27, 2023
Signed : Oct 10, 2023
Invested : Oct 13, 2023

Sector

Commercial Banking - General

Project Description

The proposed investment consists of a senior A Loan to Banco Consorcio S.A. (“Banco Consorcio” or the “Bank”), for up to US$250 million, to support the growth of the Bank’s mortgage portfolio in Chile with a percentage of the loan proceeds destined as housing loans for women. The loan will have a 5-year tenor and a 3-year grace period.

Associated Advisory Engagement

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
Syndications	Housing Loans to Individuals
Straight Senior Loan	Housing Loans to Individuals

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

Development Impact

IFC anticipates that the Project will help narrow the housing finance gap in Chile by improving access to housing loans and mortgages, with a special focus on housing loans for women. Only 41% of the system’s mortgage loans are destined to women, as there are several barriers that women face to own a house in Chile, including: (i) less disposable income as women in Chile earn 22 percentage points less compared to men; (ii) women in Chile work an average of 12 more hours than men when including unpaid work, which leaves them with less free time to deal with the bureaucracy of applying for a loan; and (iii) women face discrimination in obtaining credit as found by a report that showed that credit requests submitted by women had less probabilities of being approved by banks compared to requests submitted by men. For the past five years, Banco Consorcio has been constantly expanding its housing portfolio, which reached US$1.5 billion as of December 2022 (posting a 67% CAGR since 2017). Women were present in 51% of the Bank’s mortgage loans, as either the only borrower (34%) or as a co-borrower (17%). By the end of the Project, it is expected that at least 60% of the Project’s funds will be destined to provide housing loans for women (either as only borrower or co-borrower).

The Project’s additionality is financial, based on financing structure through the provision of long-term funding, which is limited in the local market for this amount and structure. The Project, with a 5-year tenor and 3-year grace period will help the Bank increase its long-term financing and improving its maturity mismatch to support further portfolio growth. In addition, the loan will allow Banco Consorcio to strengthen its liquidity indicators considering the new Basel III requirements in Chile, which are expected to be fully implemented by 2025.

E&S Category Rationale / Risks and Mitigation

The investment consists of a senior A Loan to Banco Consorcio, for up to US$250 million, to support the growth of the Bank’s mortgage portfolio in Chile and has been classified as category FI-3 according to the IFC Sustainability Framework. The project will target individuals only, therefore, the E&S risks associated with the Project are expected to be low. The client will be required to continue to demonstrate commitment to meet the labor standards under PS2 and to inform the IFC if there are any changes in the scope of its operations that affect the E&S risk of its portfolio.

Contacts

For Inquiries About the Project, Contact

Banco Consorcio
Mara Forer Iagolnitzer
Chief Financial Officer
+562 2787 1833
mforer@bancoconsorcio.cl
Santiago, Chile
www.bancoconsorcio.cl

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Fax: 202-974-4384

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