CBC is Sri Lanka’s largest private sector commercial bank with an approximately 12% market share. Its asset book is diversified across retail, SME, corporate and project finance. As a strategic client of IFC’s with investment and advisory relationship dating back to 2003, CBC is the ideal partner with regards to IFC’s priority initiatives for Sri Lanka which range from supporting the growth of SMEs to the reconstruction and development of the Northern and Eastern provinces of the country.

The Bank is listed on Colombo Stock Exchange. The top shareholders in the Bank include Government of Sri Lanka via Sri Lanka Insurance Corporation (SLIC), Employee Provident Fund (EPF), Employee Trust Fund (ETF), Bank of Ceylon, National Savings Bank; DFCC Bank -a specialized bank in Sri Lanka, SBI Venture Holding Pvt. Ltd – a Venture Capital/Private Equity group based in Japan and IFC.

The Project consists of an up to $65 MM, 7 year DPR-backed senior loan to CBC.

65.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	65.0
Equity

* These investment figures are indicative

The head office of CBC is located in Colombo but the Bank has a wide branch network across the country. The Project will promote access to financing for SMEs with a focus on SMEs located in the relatively underdeveloped Northern and Eastern parts of Sri Lanka.

The Project will provide support for expansion of CBC''s SME portfolio. Such SME financing will provide a boost for the agriculture, infrastructure and tourism sectors in the post conflict provinces of the country.

Capital market development - The Project will provide a capital markets demonstration effect showcasing a novel avenue for Banks to raise long term FCY financing through a future flow of DPR which is currently unleveraged.

IFC will play a catalytic role and provide technical know-how on project structuring to establish an innovative funding approach that could be used in the diversifying available sources of sustainable financing for CBC, which will allow CBC to raise longer tenor financing at competitive pricing. The structure once set up can be used by CBC for subsequent issuances, thereby, providing economies of scale.     

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 SME portfolio for types of transactions, size, tenor and industry sectors and determine the Applicable Performance Requirements that would include a combination of (i) the IFC FI Exclusion List; (ii) the applicable National Social and Environmental Laws and regulations; and/ or (iii) the IFC Performance Standards.

CBC as an existing IFC client has an SEMS in place along with a designated SEMS officer. IFC will review the existing SEMS of the client in light of this investment and if required, IFC will suggest Supplemental Actions to address any gaps in the SEMS. IFC will also appraise the FI’s labor practices according to the IFC’s Performance Standard # 2, i.e. Labor and Working Conditions.

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

Upgrade, if necessary, the existing Social & Environmental Management System (SEMS) to the satisfaction of IFC

Confirm the person(s) responsible and qualified to manage and implement the SEMS

Commit to implement the SEMS, to ensure that its investments/activities are in compliance with the Applicable Performance Requirements

Demonstrate commitment to applying the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions

Submit a periodic report to IFC as per a format to be provided by IFC