The Trust Bank Limited was established in November 1, 1996 to take over the assets and liabilities of the liquidated Meridien BIAO Bank. It is currently owned by six institutions: Belgolaise Bank (35%), Social Security & National Insurance Trust (33.09%), Holding Cofipa (10%), FMO (10%), African Tiger Mutual Fund (6%), and Ghana Reinsurance Company Limited (5.91%). TTB, a licensed commercial bank, provides general financial intermediation with a focus on universal retail banking services. In terms of asset size, it is the eighth largest bank in Ghana. The core of TTB’s customers are in the middle-tier market segment, mainly SMEs and corporate bodies engaged in sectors such as agribusiness, commerce, construction, manufacturing and services. TTB is considered one of the most SME friendly banks in Ghana. It is also one of the few banks that lends to schools; its school portfolio is currently the best performing of all its SME sectors.

This transaction would be structured as a risk-sharing guarantee with TTB. IFC’s guarantee will cover 50% of the principal credit losses that are in excess of a 5% first loss threshold up to a maximum of 9.5 billion cedis (equivalent of $1.1 million) with respect to the credit performance of a pool of loans to schools originated by TTB. The Bank’s first-loss position would have to be fully exhausted before IFC would have to pay any guarantee claims under the program. The portfolio is expected to reach a size of 20 billion cedis ($2.2) over the next 18 to 24 months. Individual loan sizes will range from 200 million cedis ($22,500) to 3 billion cedis ($337,100). Under the proposed structure, with IFC as second loss partial guarantor, IFC would reimburse the Bank for half of the principal credit losses of the underlying loans (but only when credit losses exceed 5%). IFC’s 47.5% share of the second loss guarantee represents our maximum potential liability under this structure. IFC’s partial guarantee would be denominated in local currency.

1.08 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	1.08
Loan
Equity

* These investment figures are indicative

The Trust Bank is headquartered in Ghana at: Reinsurance House, 68 Kwame Nkrumah Avenue, Adabraka, Accra. It has eleven additional branches located in Accra, Kasoa, Kumasi, and Tema. The participant private schools will be drawn from the Greater Accra Region.

Development Impact: The project will have a substantial impact on both the education and financial sectors. First, the proposed project will have a strong development impact in helping to improve the educational quality and financial and managerial capacity of private primary and secondary schools in Accra. In doing so, the project will widen access to much-needed quality education. Illiteracy in Ghana is still more than 40%, and government spending on basic education has not kept up with population growth. The enormous demand for private schools is currently unmet, in large part because schools have little access to affordable, long-term financing, and little training in financial management. This project will address both shortcomings, and, with respect to the latter, demonstrate sound practices throughout the sector. Second, the project’s technical assistance component will help schools to improve the quality of education they provide, thus setting a standard for private sector, and improve the business environment for private education. Third, the project will introduce to the financial sector a means of delivering medium-term local currency financing to educational and other institutions. Finally, if successful, this project would provide a replicable model for reaching small education providers—which comprise the vast majority of private providers—throughout Africa (and other regions). IFC could thus expand education financing to other African countries with similar markets and constraints. IFC Role: IFC’s guarantee will enable the Bank to develop a medium-term lending program for private schools, which are in critical need of such financing for development. Further, the use of a guarantee instrument will help improve options for local currency financing in Ghana. The accompanying technical assistance program will provide comfort to the Bank, and prepare schools to borrow from the formal sector. It will also improve the business environment and the educational quality of schools, which, apart from the obvious social benefits, will make them less risky borrowers. Thus, this Project is helping to create the basic conditions for medium-term lending in the education sector.

This is a Category FI Type 1 project according to IFC''s environmental and social review procedure. The Trust Bank will be required to establish an environmental management system that will ensure that investments are consistent with applicable host country environmental laws and regulations; designate appropriate individuals who will have responsibility for the environment and attend IFC’s environmental management workshops or an approved equivalent; and submit to IFC an environmental management plan and annual environmental performance reports.
Location of environmental documents in locally affected community
Environmental documentation will be made available at the following location: The Trust Bank, Reinsurance House, 68 Kwame Nkrumah Avenue, P.O. Box 1862, Accra. Ghana