48085 - Atlas SME BOW

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Summary of Investment Information

Project Number

48085

Company Name

BANCO ATLAS SA

Date SPI Disclosed

Oct 6, 2023

Country

Paraguay

Region

Latin America and the Caribbean

Projected Board Date

Nov 15, 2023

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Jan 11, 2024

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Dec 20, 2023
Signed : Dec 21, 2023
Invested : Jan 9, 2024

Sector

Commercial Banking - General

Project Description

The proposed investment consists of a 4-year IFC loan to Banco Atlas S.A. (“Banco Atlas” or the “Bank”) for up to US$50 million to expand the Bank’s small and medium enterprises (“SMEs”) lending program, of which at least 25% will be on-lent to Women-Owned SMEs (“WSMEs”) (the “Project”).

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	Loans to SME Borrowers

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

Development Impact

IFC anticipates that the Project will contribute to narrow the finance gap for SMEs in Paraguay, supporting financial inclusion in the country. The SME finance gap in Paraguay is US$3.9 billion according to the SME Finance Forum, representing approximately 14% of the country's GDP. Informal micro and SME demand for finance is estimated at another US$3.6 billion. Improving access to finance and thus productivity of SMEs is crucial for the development of Paraguay's economy, as SMEs are a key driver of economic growth and job creation. Furthermore, 25% of the proceeds are expected to be used to originate loans to women-owned SME, a key underserved sub-segment in the economy. According to the World Bank Group MSME database, only 19% of SMEs are owned by women in Paraguay, and the vast majority of female-owned businesses are micro. Further, there is no well-defined women-owned SME-focused lending on the market. With its earmarked contribution of 25% for WSME lending and technical assistance to improve Banco Atlas’ capacity to expand and track WSME loans, IFC envisions contributing to the inclusiveness of the Paraguayan financial sector. By working with the fastest-growing SME bank in the country, IFC intends to demonstrate the financial viability of lending to WSMEs to other financial institutions while also increasing the competitive pressure in the financial sector.

E&S Category Rationale / Risks and Mitigation

The proposed investment consists of a 4-year IFC loan to Banco Atlas S.A. for up to US$50 million to expand the Bank’s small and medium enterprises lending program, of which at least 25% will be on-lent to Women-Owned SMEs. Contextual risks applicable to the project are connected to land use change/deforestation and forced labor in the supply chain. The E&S risks are mainly associated with Occupational Health and Safety (OHS), pollution prevention and community impacts, expected to be of a medium nature. Sub-projects in the Chaco region, coal related, high-risk or activities described in IFC’s exclusion list will not be eligible. Therefore, the project has been classified as Category FI-2, according to the IFC's Sustainability Framework.

Banco Atlas has an existing Environmental and Social risk management and procedures in operation, designed and implemented in line with IFC requirements for SMEs. Current Policy and Procedures have been ratified and approved by the bank's Board on March 2022. The management system includes assessment tools, GIS based mapping procedures and the use of guidance notes for implementation and monitoring of higher risk sub-projects. Supervision includes site visits, revision of client's performance and filling of internal reports, updated at least annually. In regards to Labor practices, Banco Atlas Human Resources structure is mostly aligned with the provisions of IFC Performance Standards 2, except for its internal grievance mechanism that currently is not based on anonymity. Therefore, the bank will be required to develop and implement a new platform. As part of the Project, the Bank will be required to assess eligible sub-projects in line with IFC’s exclusion list and Paraguayan laws and legislations. The client will be required to: (1) Nominate a dedicated E&S officer; (2) Continuously provide training for relevant staff; (3) Develop and implement an internal grievance mechanism based on anonymity and procedures to address and solve potential concerns flagged by staff ; (4) remain committed to apply labor standards established by the IFC Performance Standard 2; and (5) submit a periodic report to IFC.

Contacts

For Inquiries About the Project, Contact

Banco Atlas S.A.
Paloma Ferreira Campos
Chief Treasury Officer
(595 21) 6169710
paloma.ferreira@atlas.com.py
Quesada esq. Tte. Zotti
www.atlas.com.py

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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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Task Title & Description	Anticipated Completion Date
Nominate officers	11/15/2023
Internal grievance mechanism	05/28/2024
Continuously provide Staff training	11/14/2024

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