48972 - DCM Ahli Sustainability Bond

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Summary of Investment Information

Project Number

48972

Company Name

JORDAN AHLI BANK

Date SPI Disclosed

Apr 17, 2024

Country

Jordan

Region

Middle East

Projected Board Date

May 18, 2024

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Jul 28, 2024

Department

Regional Industry FIG MCT

Industry

Financial Markets

Previous Events

Approved : Jun 10, 2024
Signed : Jun 27, 2024
Invested : Jul 26, 2024

Sector

Commercial Banking - General

Additional Project Attributes

Blended Finance

Project Description

The proposed investment entails an (i) IFC subscription of up to US$50 million in a sustainability bond to be issued by Jordan Ahli Bank Plc (“JAB” or the “Bank”) in Jordan covering the full amount at issuance and (ii) the provision by IFC of trade finance line of up to US$40 million under the Global Trade Finance Program (GTFP) for up to one year tenor (the “Project”). The bond will be structured in alignment with the International Capital Market Authority (“ICMA”) Sustainability Bond Guidelines (“SBG”), as confirmed by a Second Party Opinion (“SPO”) provider, and will aim to finance JAB's sustainability assets, including loans towards climate projects and women-owned or women led Small and Medium Enterprises (“WSMEs”).

The Project is expected to be supported by Global SME Facility (GSMEF) as described in the Blended Finance Section.

Associated Advisory Engagement

IFC will explore possible support to the Bank in the following areas: (i) internal technical capacity development to help the Bank configure its processes, procedures, and systems to develop a sustainability bond issuance roadmap; (ii) pipeline and product development to help the Bank expand its pool of eligible green and social assets so that the IFC investment proceeds are deployed in the most effective manner.

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	Labeled: Green;Blue;Social-Loans/Bonds
Straight Senior Loan	Loans to Woman-Owned SMEs

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

Development Impact

The Project is expected to have the following Development Impact: (i) Stakeholders’ effect - Increased access to Climate Finance: This Project supports JAB's development of sustainable financing, particularly for SMEs. IFC's investment and potential advisory is expected to grow JAB's climate finance portfolio significantly, with a focus on green buildings, renewable energy, and energy efficiency, thereby contributing to a reduction in GHG emissions; (ii) Stakeholders’ effect - Increased access to finance for WSMEs: The project is designed to empower women-owned and women-led SMEs in Jordan by increasing their access to finance, aiming to grow the Bank’s WSME loan portfolio, thus this initiative is expected to address the low economic participation of women and the challenges faced in accessing financial services; and (iii) Contribution to Market Creation - Sustainability: IFC anticipates that the Project will promote sustainability through the issuance of the one of the first sustainability bonds in the country that will set standards for further such issuances and increase overall climate, SME, and gender financing in Jordan.

IFC's expected additionality in this Project is both financial and non-financial. Financial additionality will be in the form of Innovative Financing Structure derived from one of the first sustainability bonds in the Jordanian market. IFC will also provide financial additionality in the form of Financing Structure by supporting a bond with up to six years maturity, which will provide JAB with the required term financing to support growth of its sustainability portfolio. Non-financial additionality would be provided in the form of Knowledge, Innovation and Capacity Building to build the necessary experience to manage the issuance of a sustainability bond in line with international best practices, as well as implementing an Environmental and Social Management System (ESMS) aligned with high industry standards.

E&S Category Rationale / Risks and Mitigation

The proposed project entails an IFC investment in a sustainability bond to be issued by Jordan Ahli Bank Plc (“JAB” or the Bank) to finance JAB’s sustainability lending in SME, social and climate-related SME projects such as energy efficiency, green buildings, renewable energy and clean transportation and women-owned SMEs (“WSME”). The project will not support activities on IFC Exclusion List, any coal-related activities, as well as 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. Given that activities to be supported under the project are expected to have low to medium E&S risks, this project has been categorized as FI-2 in accordance with IFC's Sustainability Policy. The main E&S risks of the Project relate to the Bank's capacity to correctly implement an environmental and social management system to manage the E&S risks associated with the portfolio supported through the project proceeds. These include labor and working conditions, E&S-related permits and approvals, occupational health and safety, pollution control and materials management, or supply chain related risks, waste and wastewater, water consumption among others. For this investment, the Bank will be required to screen eligible SME loans against the IFC Exclusion List, Jordanian E&S laws and regulations. JAB will be required to maintain the alignment with national LFS requirements and IFC's Performance Standard 2 on Labor and Working conditions. Due to the size and types of the activities supported, IFC's requirement on disclosure of climate-related project is not applicable for this project

The key risks are related to the ability of JAB to identify and manage environmental and social risks associated with its lending activities to eligible sustainable bond portfolio. Additional E&S risks and impacts derive from the capacity and systems in place to manage these risks. While JAB has recently approved an ESG policy and appointed a sustainability team, no E&S risk management procedures have been integrated into the bank's operations yet. As part of the Project, JAB will be required to (i) nominate an E&S officer (ii) develop and implement an E&S Management System (ESMS) in line with IFC E&S requirements (iii) manage E&S risks in the supply chain, (iv) provide training on ESMS to the staff (v) remain committed to apply the labor standards established by the IFC Performance Standard; and (vi) submit a periodic report to IF

Title	Anticipated Completion Date
Nominate an E&S officer	06/06/2024
Establish an ESMS	06/15/2024
Implement the ESMS	12/12/2024
Staff training	09/13/2024

Contacts

For Inquiries About the Project, Contact

Jordan Ahli Bank
Majed Hejab
Head of Treasury, Investments and Financial Institutions
+96265206000
Majed.Hejab@ahli.com
Queen Noor Street, Shemesani, Amman, Jordan
www.ahli.com

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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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