Project detail - BANCO INTERAMERICANO DE FINANZAS S.A.

Who is our customer

Banco Interamericano de Finanzas (‘Banbif’), a former client of FMO, is the fifth largest bank in Peru (Total Assets of USD 5.6 billion and Total Equity of USD 470 million) with a market share of 4.02% of loans and 4.21% of deposits in the system, as of December 2023. Banbif distinguishes itself as a leading performer within the Peruvian banking sector, evidencing superior portfolio quality and operational efficiency. Banbif maintains a robust focus on corporate and Small- & Medium-sized Enterprises (SME) lending while offering a comprehensive suite of banking services.

What is our funding objective?

FMO's investment of USD 100 million has a committed tranche of USD 50 million and an uncommitted tranche of US 50 million. This investment bolsters Banbif's ongoing efforts in facilitating green initiatives (50% earmarked for financing green projects), aiding agricultural SMEs (30%), and supporting SMEs in general (the remaining 20% of the facility). This strategic allocation aligns with the overarching goals of mitigating climate change impacts and fostering socio-economic equality by addressing key areas of need within the Peruvian economy.

Why do we fund this investment?

FMO focuses on fostering sustainable economic growth in emerging market funding. This facility enhances financial accessibility for green projects, agricultural SMEs, and SMEs across diverse sectors of the Peruvian economy. Moreover, FMO reaffirms its commitment to its strategic objectives by advocating for green finance principles and bolstering the support for SME entrepreneurs within the country. Notably, considering Peru's macroeconomic landscape in 2023 and the imperative for longer-term financing solutions, this investment represents a substantial additionality, offering a four-year loan financing option.

What is the Environmental and Social categorization rationale?

Banbif is classified as E&S category A, per FMO's Sustainability Policy. Banbif's portfolio has considerable exposure to large corporate clients and financial exposures to sectors with potentially significant and adverse environmental and social risks, such as oil and gas, agriculture, and mining. Key potential impacts and risks related to these sectors in the country could include deforestation, loss of biological diversity, water depletion, pollution, impact on Indigenous communities, and labor. Banbif's Environmental and Social (E&S) risks are managed through an existing Environmental and Social Management System (ESMS) operated by a dedicated E&S team. As part of the transaction, Banbif should apply the EDFI Exclusion List, Peru's E&S laws and regulations, and the IFC Performance Standards for applicable transactions.