EBL was incorporated in Kenya in 1984 as a building society and converted to a fully fledged commercial bank in 2004. It was listed on the Nairobi Stock Exchange in 2006 and the Uganda Securities Exchange in June 2009. The Bank has over 28,000 shareholders. Major owners are as follows: Helios EB Investors (24. 5%), British-American Investment Company (Kenya) Limited (11.0%), Equity Bank Employees Share Ownership Plan (4.2%), James Njuguna Mwangi (3.45%) and Leah Wanjiku Muguku ( 3.3%).

The proposed investment will be in the form of a senior loan of up to $100 million for IFC’s own account.

180.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	100.0
Equity	80.0

* These investment figures are indicative

EBL is based in Nairobi, Kenya, and has existing operations in Kenya, Uganda, Rwanda and South Sudan. Total number of branches as of Dec. 31, 2011 was 180, and the investment is expected to support the Bank’s operations throughout its network.

The project is expected to:

i) Support Lending and Growth in the East African Market:
Equity Bank has a wide distribution network in East Africa with subsidiaries in Uganda and South Sudan, offering financial services to the large unbanked population. The Project will support the Bank’s continued growth ultimately contributing to renewed economic activity in East Africa.
(ii) Increased Access to Finance for SMEs:

SME''s are a key growth sector for EBL. IFC will assist with SME development beyond financing to include advisory services for key aspects of its SME operations including lending to the agricultural sector and women entrepreneurs. The expected improvement in access to finance for SMEs will help to generate employment at the grass roots level and further facilitate regional trade which is expected to grow rapidly following the economic integration of the East African Community.

(iii) Support regional Expansion and integration
IFC''s engagement with EBL will its regional expansion strategy and contribute to increased competition and service in the regional banking sector. This will strengthen the regional economy and contribute to the success of the newly created economic community.
(iv) Increased Financial Inclusion at the bottom of the pyramid
Equity Bank’s has a clear focus and commitment to increasing financial inclusion at the bottom of the pyramid through new and innovative products and services. IFC’s investment will support the Bank’s growth strategy and allow it to reach even more customers at the bottom of the pyramid.

(i) Financial Risk Mitigation: Providing long-term financing which will enhance the stability of the Bank’s funding base and allow it to extend the tenor of its facilities to SME’s to support capital projects without introducing unsustainable balance sheet mismatches.

(ii) Demonstration Effect
EBL is a market leader and this investment will promote the use of long term funding and encourage prudent balance sheet risk management across the banking sector.

(iii) Standard Setting: IFC will help EBL establish an environmental and social management system and enhance its environmental and social policies. It will also suggest improvements to its corporate governance.

(iv) Knowledge and Innovation: IFC is considering providing EBL with a package of advisory services aimed, inter alia, at improving its credit standards, for example in the area of agribusiness.

(v) Non-financial Risk Mitigation: IFC will provide comfort to EBL as it pursues its expansion strategy in neighboring countries.

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.
During appraisal, IFC analyzed the FI portfolio and the activities proposed to be supported with IFC financing for types of transactions, size, tenor and industry sectors and determined as the Applicable Performance Requirements, based on an analysis of the potential Social and Environmental risks associated with the FI portfolio and considering IFC’s investment, the IFC Exclusion List, the host country laws and regulations and the IFC Performance Standards.

IFC also appraised the FI’s existing Environmental and Social Risk management practices, capacity to implement the same, and reviewed the Bank’s labor practices. It was found that Equity Bank already has an E&S policy to ensure financing provided is compliant with the national laws and regulations. The policy will need to be enhanced to ensure screening against the IFC Exclusion List and the Performance Standards, and an Environmental Management System (ESMS) be developed. Based on a preliminary review the Bank’s labor and working conditions were found to be in compliance with the requirements of Performance Standard 2.

Considering the Applicable Performance Requirements and FI E&S Policy and capacity review, the project will be required to: (i) Upgrade the existing E&S Policy and develop a Environmental &
Social Management System (ESMS), prior to disbursement to the satisfaction of IFC, (ii) Identify responsible, qualified persons to manage and implement the ESMS and ensure all staff involved in ESMS implementation are adequately trained to implement the revised policy and procedures, (iii) Commit to implement the ESMS, to ensure that its lending activities are in compliance with the Applicable Performance Requirements, (iv) Submit a periodic report to IFC as per a format to be provided by IFC.