Banco de la Produccion, S.A
Status: Investment in contracting phaseWhy disclosure?
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Disclaimer
The information as disclosed is indicative and provided on an "as-is/as available" basis for general informational purposes only and should not be construed as financial, legal or investment advice, nor as a commitment or an offer to arrange or provide any financing. The final decision to provide financing is subject to the terms and conditions of FMO in its sole and absolute discretion. When providing links to other sites, FMO bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. The information on proposed investment for high-risk investments is made available in the language relevant to the country or region where the bulk of operations take place. Translations of any information into languages other than English are intended as a convenience for local stakeholders. In case of any discrepancy, the information provided in English will prevail.
Who is our prospective customer?
Banco de la Producción S.A. Produbanco (Produbanco) is a universal bank in Ecuador, owned by the Promerica Financial Corporation, both long standing clients of FMO. As of June 2023, Produbanco is the second largest bank in Ecuador with Total Assets amounting to USD 7.0 billion.
What is our funding objective?
Half of the facility (USD 7.5mln) will be earmarked to on-lend to green projects in Ecuador in accordance with FMO’s criteria. Expectations are that the green tranche will mainly finance sustainably certified projects and energy efficiencies in a wide range of sectors. The other half of the facility will be used to finance Small and Medium Enterprises (‘’SMEs’’), including USD 3mln towards Women owned/led SMEs.
Why do we want to fund this investment?
Through this facility, FMO realizes its strategic goals to finance SMEs, to reduce gender inequalities, to contribute to a green economy and to mobilize other investors as the FMO facility is part of larger syndicated loan arranged by FMO. Produbanco plays an important role in providing access to finance to SMEs, a critical segment in supporting job creation and has ambitions to grow its green and gender portfolio. Given the current macroeconomic situation in Ecuador, providing an 8-year subordinated debt is relevant, as this funding will also strengthen the Tier 2 Capital base of Produbanco and fund organic growth.
What is the Environmental and Social categorization rationale?
Produbanco has been assigned an E&S risk category of A, in accordance with FMO’s Sustainability Policy, due to the exposure to high-risk sectors (mainly industrial manufacturing, fisheries and agriculture, including palm oil) and due to a large amount of transactions with large corporate clients in its portfolio. Potential impacts and risks related to these sectors can include soil, air, and water pollution, land conversion and biodiversity impacts, poor labour and working conditions, impacts to vulnerable communities, supply chain and resource efficiency aspects. Produbanco has a comprehensive ESMS managed by dedicated E&S specialists and takes a conservative approach to its risk classification. Moreover, beyond the application of the EDFI Exclusion list and national regulation, Produbanco assesses compliance with the IFC Performance Standards for applicable transactions. The Bank has finalized the Environmental and Social Action Plan (ESAP) for the previous transaction, with no new ESAP expected for this transaction.
More investments
- Website customer/investment
- https://www.produbanco.com.ec/
- Region
- Latin America & The Caribbean
- Country
- Ecuador
- Sector
- Financial Institutions
- Publication date
- 8/15/2023
- Deadline for feedback
- 10/14/2023
- Total FMO financing
- USD 15.00 MLN
- Funding
- FMO NV
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Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk
Environmental & Social Category
(A, B+, B or C) - A