Diamond Trust Bank Kenya Limited (DTBK) is incorporated as a public company which is listed on the Nairobi Stock Exchange. The Bank provides a wide range of corporate, retail and commercial banking services. Aga Khan Fund for Economic Development (AKFED) and its affiliates are the principal shareholders in DTBK with 38.6% shareholding as at 31 December 2007. IFC is also a 9.8% shareholder.

IFC’s total investment is proposed to be $45 million.

45.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	45.0
Equity

* These investment figures are indicative

DTBK is headquartered in Nairobi, Kenya. It has a network of 11 branches in Kenya. Its subsidiary in Tanzania has 5 branches and its affiliate in Uganda has 3 branches.

The project is expected to have a high development impact in the following measurable areas: - increasing credit availability to MSMEs; - enhancing competition in the banking sector in Kenya; and - expanding credit availability across all segments of the market. Another benefit of the project will be the enhancement of the capabilities of the Bank to lend to MSMEs, through the presence of an on-site advisor who will transfer MSME-banking knowledge to the Bank’s staff, and develop its institutional capacity in this field.

The project supports the expansion and strengthening of DTBK. IFC’s equity and subordinated tier 2 eligible loan investments will strengthen the capital base of DTBK, enabling it to: - enhance its operational capabilities; - advance to a tier-1 local commercial bank status; and - increase DTBK’s capacity to intermediate financial transactions through an expanded network of domestic branches. IFC’s senior loans are designed to support an expansion of DTBK’s residential mortgage portfolio, providing critically needed long-term and more affordable funding to families that wish to own their homes, with secondary stimulus to overall economic activity. IFC’s loans would also help DTBK to increase its lending to SMEs and consumers, which are both vital for Kenyan economic development. The IFC funding would also seek to support DTBK’s capacity to intermediate in high-priority sectors such as education, healthcare and agribusiness, all which have potentially strong development impacts. Advisory services and capacity building assistance by IFC under the MSME program would help support DTBKs expansion in these segments and more specifically, to help establish best international practices and technology especially in the housing finance and high-priority sectors in DTBK.

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.

During appraisal, IFC will analyze the FI portfolio, and the activities proposed to be supported with IFC financing for types of transactions, size, tenor and industry sectors and determine the Applicable Requirements, are expected to include a combination of:

- The IFC Microfinance Exclusion List(s), and
- The applicable National Social and Environmental Laws and regulations.

IFC will also review, if required, the capacity of the FI to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in the SEMS.

Based on the review, the project will be required to:

- Develop an SEMS, prior to disbursement to the satisfaction of IFC;
- Identify responsible, qualified persons to manage and implement the SEMS;
- Commit to implement the SEMS, to ensure that its investments/activities are in compliance with the Applicable Requirements;
- Commit to take action to remedy any gaps in SEMS implementation on an ongoing basis;
- Submit a periodic report to IFC as per a format to be provided by IFC.