Banco Regional was established in 1991 by a group of Paraguayan entrepreneurs, with the purpose of promoting the development of the productive and industrial sectors in the department of Itapua. Soon after its constitution, the Bank expanded its activities to other locations in the department of Alto Parana and other productive regions near Asuncion. In January 2008, the Rabobank Group acquired a 40% stake in the Bank as part of the initiative of the Rabobank Development Program to support banks in developing countries through minority equity investments. In November 2009, Banco Regional completed the merger with the Paraguayan subsidiary of ABN AMRO Bank, becoming the largest player in the local financial system in terms of assets, with a 19% market share. The Bank has been an IFC client since June 2008, when it joined IFC’s Global Trade Finance Program.

The proposed project consists of a $30 million IFC loan to Banco Regional comprised by two tranches, as follows (the “Project”): - a 5-year multi-industry SME credit line for up to $15 million; and - a 3-year multi-industry SME credit line for up to $15 million.

30.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	30.0
Equity

* These investment figures are indicative

Banco Regional´s headquarters are based in Encarnación, Paraguay. The Bank owns 32 branches located across the Paraguayan territory.

- The Project will allow Banco Regional to provide its SME clients access to funding with longer maturities enabling them to undertake capital investments at longer tenors and attractive costs; - Given the nationwide presence of the Bank, the Project will contribute to rural economic development while reaching the BOP in rural areas; - Due to the maximum average sub-loan size of US$1 million, the facility will be 100% used to finance SMEs; - IFC will enhance its support to the expansion of a leading financial institution in the Paraguayan system.

The Project will enhance Banco Regional's capacity to provide medium- and long-term financing to Paraguayan SMEs, a segment which plays a key role in the economic development of the Country. IFC additionality arises as a consequence of the following factors: - Support the growth of Banco Regional: IFC will be supporting the growth of a key player in the local financial system, assisting in the deepening of the Paraguayan financial sector; - Promote the development of the financial sector in Paraguay: through this new investment, IFC will generate a strong demonstration effect by sending a positive signal to the market and enhancing the investors' confidence, while providing additional credit to a critical sector of the Paraguayan economy.

The Project involves IFC support for on-lending to SMEs and has been classified as Category FI. Because the key E&S risks of the project are associated with the Bank''s portfolio of investments, during appraisal IFC reviewed the Bank''s portfolio and capacity to manage E&S risks in order to determine the applicable requirements, which will be a combination of the IFC Exclusion List and the national E&S laws and regulations. The Bank has already developed S&E risk assessment procedures, which will be enhanced as part of IFC''s investment to ensure compliance with the applicable requirements and, given the client''s focus on agribusiness, incorporate specific measures to manage S&E risks in that sector. IFC also reviewed the Bank''s labor practices according to IFC Performance Standard 2: Labor and Working Conditions. Based on the review, the client will develop a grievance mechanism as part of the IFC investment.

The Bank will be required to: (i) upgrade and maintain its Social and Environmental Management System to ensure compliance with the applicable requirements; (ii) demonstrate commitment to applying the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions; and (iii) submit a periodic report to IFC as per a format to be provided by IFC.