Banca de Inversión Bancolombia, a finance corporation and wholly owned subsidiary of Bancolombia S.A., provides investment banking services to its corporate clientele. Bancolombia, the largest bank in Colombia, accounted for approximately 20% of total net loans and 19% of total net deposits within the entire local banking system as of December 2009. Bancolombia is listed in the NYSE since 1995 through an ADR program. Its largest shareholders are Grupo de Inversiones Suramericana  29.2%, the ADR program 22.6%, Colombian Pension Funds 18.4% and Inversiones Argos 7.9%. Covinoc (the “NPL Servicer”) is a local specialized servicer, which for more than 50 years has provided recovery and portfolio management services to financial intermediaries in Colombia. The company is the largest NPL servicer in the country in terms of assets under management (approximately US$ 1.3 billion as of June 2009), distributed over more than 270,000 loans. Covinoc’s shareholding structure includes: Lantro S.A. (19.4%), Ircanda S.A. (19.4%), Inversiones la Costa Ltda (19.0%), Arigu y Cia SCA (17.4%), IFC (12.98%), Delta Associates Inc (10.1%), Nicolas Gomez y Cia Ltda (0.9%), Nicolas Gomez Nieto (0.9%).

The proposed transaction consists of an investment of up to US$50 million , earmarked at financing the acquisition of non-performing loans originated by Bancolombia and its subsidiaries.

48.50 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	36.75
Equity	11.75

* These investment figures are indicative

Bogotá, Colombia.

IFC’s involvement in this program, coupled with a strong package of corporate governance, and workout guidelines, would allow it to act positively in the market place by setting an example of a distressed asset resolution mechanism, that could foster best practice in the nascent local NPL market.

IFC’s value addition is expected to be multifold and can be summarized in the following points: Countercyclical role - This transaction will provide IFC the opportunity to play a countercyclical role in the Colombian financial market, allowing a systemic institution to dispose of its non-performing assets through a market based mechanism. Best Practices - The transaction will help entice best practices for distressed assets resolution. Knowledge sharing – IFC has been active in the global NPL market for more than 10 years. The knowledge gathered during this time period could be transfer to the sponsors of the project so as to entice the development of an active NPL market in Colombia

This project involves the creation of a Special Purpose Vehicle (SPV) to purchase and manage pools of non-performing assets and has been classified as a Category FI. The NPLs Servicer is an existing client and has developed a Social & Environmental Management System (SEMS) under an existing project. Considering the nature of activities supported, the Servicer will be required to: (i) apply its existing SEMS to ensure that investments under the SPV are screened and processed to identify environmental and social risks, if any, and to identify subprojects on the IFC FI Exclusion List or that have substantial unresolved social or environmental issues; (ii) work with applicable assets being resolved to ensure that the projects are operating in compliance with the IFC exclusion list and the Applicable National Environmental and Social Laws and regulations, or have an action plan to achieve the same within a reasonable time frame; (iii) identify responsible, qualified persons to manage and implement the SEMS; (iv) continue to apply the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions; and (iv) submit annual reports to IFC.