The sponsor of the project is Banque Internationale Arabe de Tunisie (BIAT). BIAT was established in early 1976 by a group of investors composed of local institutions and individuals, and Arab and European banks, who acquired the domestic branches of the British Bank of the Middle East and Société Marseillaise de Crédit. In its early years, BIAT expanded rapidly, and in the 1980s it had become the largest private bank in Tunisia. IFC involvement with BIAT goes back to 1998 when it underwrote the first international equity offering in Tunisian in the form a GDR in which IFC invested (currently holding 1.13%). BIAT is considered the most sophisticated Tunisian bank. It is the leading customer-deposit collector through product innovation and sophisticated marketing. Historically the Bank had a strong involvement with domestic corporates and SME’s which it is now complementing with new developments in the more profitable consumer/personal banking. This developmental strategy should help the bank broaden its large deposit base, diversify its sources of income, reduce its average risk per customer, and report higher profitability. Overall, BIAT enjoys a strong market franchise among its clients as evidenced by a stable market share of about 11% of loans and 15% of deposits over the past four years.

IFC’s investment will be in the form of subordinated loan (C Loan) for up to $50 million to BIAT. The loan will be structured to meet the regulatory requirements for a Tier 2 capital as per Central Bank of Tunisia (CBT) guidelines.

50.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
Equity

* These investment figures are indicative

The location of the project is in Tunis, Tunisia.

This is an FI Type 1 project. BIAT must establish and maintain an environmental management system to ensure that investments under relevant operations meet host country environmental, health and safety requirements and are consistent with IFC’s exclusion list. IFC will asses BIAT’s ability to carry out environmental reviews and if need be, will work with the bank to develop the capacity to meet these requirements.
Location of environmental documents in locally affected community

The project will have the following impacts on development: - Impact on Customers: the proposed loan will allow BIAT to provide new products and additional loans to existing clients, particularly to SMEs, as well as expand in the more profitable consumer and personal banking area. Customers will therefore benefit from increased access to financing sources possibility at competitive rates. - Impact on Financial Sector: BIAT is considered the most sophisticated Tunisian bank. It is the leading customer-deposit collector through product innovation and sophisticated marketing. By expanding its presence in the market, BIAT is likely to improve practices and standards in the financial sector. Considering that the proposed IFC loan will be the first tier 2 capital instruments in the sector, the project is expected to introduce a new funding class to the market that can be replicated by other Tunisian banks with capital adequacy constraints. Impact on the Economy: The successful implementation of BIAT's development strategy will achieve the following results: - promote lending in the economy - develop financial intermediation by increasing the depositor base and - underpin the overall growth in the economy, as higher loan volumes will benefit customers, suppliers and new entrants. The three key developmental indicators to be monitored will be: - the number of loans originated by BIAT; - the increase of its depositor base and - the diffusion of best practices in the financial sector. IFC Role: This IFC transaction is expected to - help improve the financial fundamentals of the bank by increasing capital adequacy ratios - support BIAT’s in its diversification strategy into the consumer lending market and the growth of its loan book, and - lead the way for other financial institutions to access the subordinated debt market by launching a landmark transaction in Tunisia, representing the first Tier 2 instrument in the banking sector