48094 - DCM San BR Micro

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Summary of Investment Information

Project Number

48094

Company Name

BANCO SANTANDER BRASIL SA

Date SPI Disclosed

Oct 30, 2024

Country

Brazil

Region

Latin America and the Caribbean

Projected Board Date

Mar 21, 2024

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Nov 22, 2024

Department

CF6L3 - Regional Industry FIG LAC & EUR/FIG LAC 3 Southern Cone & Brazil

Industry

Financial Markets

Previous Events

Approved : Mar 21, 2024
Signed : Jun 14, 2024
Invested : Jun 20, 2024

Sector

Commercial Banking - General

Project Description

The Project consists of two investments in Banco Santander (Brasil) S.A. (“Santander Brasil” or the “Bank”) totalling up to US$300 million and comprised of: (i) a US$250 million international USD-denominated 3-years senior unsecured social bond, issued by the Bank under its global medium-term note program (“MTN”); and (ii) an up to US$50 million 3-years senior loan to finance blue-related underlying assets. The bond was issued on June 20th, 2024, being fully subscribed by IFC, and will support MSMEs throughout Brazil, being that a total of US$150 million will be destined to SMEs in the North or Northeast regions, and the remaining US$100 million will be directed to microentrepreneurs across the country. The loan is still to be committed and its proceeds will be used to support Santander Brasil’s blue-related investments in the economy.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	300.0
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	Labeled: Green;Blue;Social-Loans/Bonds
Straight Senior Loan	Loans to SME Borrowers
Straight Senior Loan	Loans to Microfinance

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

Development Impact

The most significant, expected outcomes of the Project are: (i) increased access to finance for microentrepreneurs and SMEs in the North and Northeast regions of Brazil; and (ii) greater access to finance for the blue economy. Beyond these outcomes, IFC anticipates that the Project will promote the sustainability of the Brazilian financial markets through the implementation of capacity and standards to manage social and blue finance. The market creation impact is expected through the demonstration and replication channel.

IFC’s additionality through the Project is both financial and nonfinancial. Financial additionality is being provided in the form of an innovative financing structure, as the issued social bond represented Santander Brasil’s first international bond dedicated to supporting MSMEs in the Brazilian banking system. Nonfinancial additionality will be provided in the form of knowledge, innovation and capacity building, as IFC will help the Bank to start offering an inaugural loan targeting ocean- and water-related activities. This guidance will help Santander Brasil to effectively channel its resources into environmentally responsible projects.

E&S Category Rationale / Risks and Mitigation

IFC will support Santander Brasil's microentrepreneurs, regional SMEs, and blue economy portfolios. The Project has been classified as category FI-2 according to IFC's sustainability framework. E&S risk in the targeted MSMEs portfolios are considered to be low, while in the risk in the blue portfolio are considered medium and mainly related to potential impacts during the construction and operation of sanitation subprojects, such as impacts on biodiversity and the health and safety of affected communities. To manage these risk, the Project will not support any activities with significant E&S impacts, such as (i) involuntary resettlement; (ii) risk of adverse impacts on indigenous peoples; (iii) significant risk to or impacts on the environment, community health and safety, biodiversity, cultural heritage; or (iv) significant occupational health and safety risk. Sub-projects involved in coal related activities will also not be eligible. As part of the project the Bank will be required to (i) maintain its ESMS procedures to screen and assess subprojects against the applicable requirements (IFC exclusion list, national law, and the screening of high-risk activities); (ii) remain committed to applying the labor standards established by the IFC Performance Standard; and (iii) submit a periodic report to IFC. For the blue initiative, Santander Brasil will be required to seek consent to disclose subprojects of US$20 million equivalent or more on a yearly basis, including names and locations

Santander Brasil is a subsidiary of the Santander Group, an Equator Principles signatory. The Bank has developed and implemented an ESMS in line with Brazilian laws and regulations, and its practices are aligned with IFC's requirements for the Project. For screening out higher-risk activities from the Project-supported portfolio, the Bank will rely on its existing E&S categorization procedure, which entails a comprehensive questionnaire to assess sub-clients environmental-, social-, and climate-related practices. Assessments also include reviews of permits and the client's E&S rating. Santander Brasil performs E&S screening while on-boarding new clients or through credit renewal on a yearly basis. For monitoring, in addition to automated alerts, the team performs biannual reviews. Santander Brasil has an external communication mechanism available through its website and corporate phone (voice and text) number, where the Bank can receive and respond to third party concerns. Social Protection and Labor practices are aligned with Performance Standard 2: Labor and Working Condition.

Contacts

For Inquiries About the Project, Contact

Banco Santander (Brasil) S.A.

Av. Pres. Juscelino Kubitschek, 2235,

São Paulo, SP 04543-011

Brasil

Facsimile: +55 11 3553 7797

E-mail: gestaofinanceira_alm@santander.com.br

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IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

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SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

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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