The Project Company is Southeast Bank Limited (SEBL). SEBL was established in 1995 by a group of professionals and industrialists. The Bank had its IPO in 1999 and is currently listed on the Dhaka and Chittagong Stock Exchanges. The Bank’s shareholding is well-diversified with no individual shareholding exceeding 10%. The Bank had 66,898 Shareholders as of 31st December, 2010. In addition to the 15 Non-Executive Directors, the Managing Director of the Bank also holds a seat on the Board as an Executive Director. At December 31, 2010, the Bank had total assets of $1.86 billion, total liabilities of $1.6 billion and Shareholder’s Equity of $244 million.

The total project cost will be up to $10 million comprised of an IFC short term loan (tenor of up to 12 months), renewable twice up to 3 years .

10.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	10.0
Equity

* These investment figures are indicative

As of December 31, 2010, the Bank had 76 branches and 2 Off-Shore Banking Units on Chittagong & Dhaka. During 2010, the Bank increased financing to the SME sector by opening another 10 (Ten) SME / Agriculture Branches throughout the country resulting in 15 (Fifteen) SME / Agriculture Branches by the end of December, 2010. Outstanding loans to SMEs stood at US$186 Million as on December 31, 2010, compared to US$128 Million as on December 31, 2009, a 45% year-on-year growth. In order to further finance the SME sector, the Bank is actively considering additional resource mobilization, redesign of its products and re-structuring its business process.

The key indicators for this Project will be the increase in number and value of short term transactions to finance SME working capital needs, number of SMEs financed, female employment, number of jobs created and supported. The Project will help accelerate economic growth in Bangladesh by providing SMEs and exporters with the necessary liquidity to finance their trade and working capital needs. The demonstration effect of the IFC funding will encourage the entry of international banks to finance the local banking sector and increase their range of funding options. IFC’s loan will support job preservation in the small business sector that may otherwise have been forced to reduce staff in the face of financing constraints.

Banks have played a pivotal role in supporting emerging market (“EM”) SMEs, but today even the international banks face new challenges, such as increasing sovereign and geo-political risks, that translate into increasing funding costs that directly impacts their ability and willingness to finance interbank market, especially for the smaller regional players. As a result, the enduring gap between the demand for liquidity in EMs and current global banking capacity constrains the private sector growth in these markets. IFC plays a unique role in addressing this gap through a comprehensive Short-Term Finance solution, especially in countries like Bangladesh which are SME driven and export-reliant to finance economic growth. IFC will play a catalytic role in providing FX liquidity to banks in Bangladesh following the phasing out of direct FX support by the Central Bank. Based on market demand, IFC could also play a potential mobilization role in bringing new funding to local banks.

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.

IFC will analyze the FI portfolio to identify high risk sectors and determine the Applicable Performance Requirements that would include a combination of: (i) The IFC Trade Finance Exclusion List; (ii) The applicable National Social and Environmental Laws and regulations; and (iii) Eligibility Criteria/E&S Checklist for high risk sectors.

IFC will also appraise the FI’s labor practices according to the IFC’s Performance Standards 2: Labor and Working Conditions and review, if required, the capacity of the FI to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS).

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

· Develop a Social & Environmental Management System (SEMS), to the satisfaction of IFC
· Identify responsible, qualified persons to manage and implement the SEMS
· Commit to implement the SEMS, to ensure that its investments/activities supported by IFC financing 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