BSP is PNG’s only indigenous bank and is its largest retail and commercial bank with assets of approx. $3.4 billion (as at December 31, 2009). Headquartered in Port Moresby, BSP’s banking franchise is underpinned by an extensive branch network of 35 branches in PNG, 5 overseas branches in Fiji, Solomon Islands and Niue, and 154 ATMs. BSP commenced its operations in 1957 as a branch of the National Bank of Australasia Ltd. (“NBA”). In 1993, BSP’s assets and operations were spun off from NBA and acquired by a company owned by the GoPNG. In 2002, BSP was privatized and one year later listed on the Port Moresby Stock Exchange.

The RSF with BSP will cover a total SME portfolio of PGK 150 million (approx. $57 million) of which IFC will risk share 50%, i.e. PGK 75 million.

32.01 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	32.01
Loan
Equity

* These investment figures are indicative

BSP has 35 branches throughout PNG, and its headquarters are located in the country’s capital, Port Moresby. The SME portfolio covered under the RSF will contain loans to SMEs across the entire country.

The Project is expected to have significant development impacts on account of: (1) Access to Finance: The Project will increase access to finance for the underserved SME market in PNG. (2) Support for SMEs: IFC support for the SME sector will greatly enhance the ability for SMEs to engage meaningfully and profitably in the supplier arrangements for the LNG project and subsequent extractive industry projects. (3) Capacity Building: The TA associated with the RSF will increase the capacity of the banking sector to provide services to the SME sector that should continue to have positive impacts beyond the life of the RSF, build the skills and abilities of the SMEs, and provide technical assistance to GoPNG.

(i) Leadership in structuring the facility: IFC experience in structured finance products in general and RSFs in particular, as well as Access to Finance, places it in a unique position to take the lead in structuring the RSF. (ii) Demonstrating confidence in and support for the PNG banking sector: IFC risk sharing demonstrates a confidence in the banking and SME sectors and will encourage financiers to expand outreach to SMEs. (iii) Proactively supporting locally owned businesses to enable participation in the country's booming economy: IFC commitment to improving access to finance for all in PNG and particularly assists those local businesses to take up new business opportunities.

The RSF has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. Activities supported by the RSF will need to meet the requirements of the applicable national environmental and social laws and regulations, IFC’s FI Exclusion List and Performance Standards, and the World Bank Safeguard Policies (the Applicable Performance Requirements). To guide BSP to manage E&S risks associated with eligible borrowers covered under the RSF, the World Bank Group, with the endorsement of the country government, has published an Environmental and Social Risk Management Operations Manual (“EOM”). The EOM requires that BSP and other future participating banks develop and implement a social and environmental management system (“SEMS”) and maintain adequate capacity to achieve compliance with the Applicable Performance Requirements. Specifically, each participating bank will be required to:

 Develop an SEMS, which will be a condition of effectiveness for the RSF agreement and satisfactory to IFC and IDA;
 Identify responsible, qualified persons to manage the implementation of the SEMS;
 Implement the SEMS to ensure that its financing activities supported by the RSF are in compliance with the Applicable Performance Requirements;
 Commit to apply the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions; and
 Submit periodic E&S monitoring reports to IFC.

As a portfolio client of IFC, BSP is in the process of developing its SEMS. IFC and IDA will review BSP’s SEMS and if needed, recommend necessary actions to the bank to amend the SEMS to reflect any additional requirements of the EOM.