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| Citizens |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 27323 |
| Company name | Citizens Bank Guyana Inc |
| Country | Guyana |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Pending Signing |
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| Date SPI disclosed | February 24, 2009 |
| Projected board date | March 30, 2009 |
| Previous Events | Approved: June 17, 2009 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
Citizens Bank Guyana Inc was incorporated in 1993 as a wholly owned subsidiary of Citizens Bank Jamaica Limited and commenced operations on November 7, 1994. In November 1998, local shareholders, having previously acquired 30% of its shareholding, acquired the remaining 70.0%. The Bank is oriented towards serving large companies, SMEs and retail banking through its 4 branches and 8 ATMs.
The purpose of this project is to establish a long term partnership with the Bank and work with them to grow in the local market. There will be a staggered approach starting with building the Bank’s internal capacity through Advisory Services for risk management enhancements, establishing a track record of performance in SME lending through the loan agreement and the DOTS and covenants and then possibly considering an equity investment in the Bank as and when the capital needs of the institution grow. |
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| Project sponsor and major shareholders of project company |
The project sponsor is Banks DIH Limited, a well established and respected conglomerate in Guyana. Their primary business is the production and distribution of beer, wines, liquor and assorted beverages and the processing of food items and the operation of restaurants and bars. With total assets of $170m and a reported net worth of more than $72.7m, they are one of the largest business units in Guyana. It has more than 13,670 local shareholders with Bank Holdings Limited holding 20%, Demerara Life Group of Companies 9.5% and Trust Company (Guyana) Limited 5.8%. The rest of the shareholders own less than 5% each.
Currently, Banks DIH holds a 51.0% stake in Citizens Bank, Hand-in-Hand Group of Companies 16.5%, Continental Agency Limited 16.7% and other shareholders, including staff members, 15.8%. |
| Total project cost and amount and nature of IFC's investment |
The total project cost is estimated at $4 million.
The proposed IFC investment is a $2 million senior loan earmarked for MSME finance and a trade exposure of up to $2m. The trade limit will be subject to a further evaluation on the part of the trade team on the Bank’s capacity to handle the operational risk related to documentation and processing and also gain access to a SWIFT account. |
| Location of project and description of site |
| Citizens Bank Guyana Inc. is headquartered in Georgetown, the capital city, and has 4 branches in the northeast of the country, where most of the population is concentrated. |
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| Anticipated development impact of the project |
The development impact indicators for this project will include:
Growth in MSME portfolio in terms of amounts and the number of clients.
Improving asset quality of portfolio.
Establishing a SEMS as part of the risk management tools for management.
Measuring the increase in banking penetration within Guyana. |
| IFC's expected development contribution |
By designing the project as a blend of both TA and investment, IFC is acting as more than just a financier for Citizens Bank, in fact it is being seen by the management and shareholders as an advisor and partner geared at facilitating the growth of the Bank. Having its main shareholder outside of the financial sector has meant that Citizens Bank does not receive the same technical support from its parent as many of the other banks operating in Guyana (Republic Bank (Trinidad) Bank of Nova Scotia (Canada)). This is what has led Citizens to become a more conservative bank, focusing on placing much of its liquidity in regional government paper.
This project aims to switch that mindset within the Bank and also expand the Bank’s outreach so as to (i) diversify the asset base, (ii) expand funding sources, (iii) build a wider client network, (iv) establish risk evaluation parameters and (v) expand access to credit for MSMEs in Guyana. |
| Environmental and social issues - Category FI |
This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.
During appraisal, IFC analyzed the FI portfolio and the activities proposed to be supported with IFC financing for types of transactions, size, tenor and industry sectors and determined the Applicable Performance Requirements based on an analysis of the potential Social and Environmental risks associated with the FI portfolio. The Applicable Performance Requirements are:
- The IFC FI and Microfinance Exclusion Lists and
- The applicable National Social and Environmental Laws and regulations
IFC also reviewed the FI’s existing Social & Environmental Management System (SEMS), if any. It was found that the FI does not have a SEMS. This will be included as a Supplemental Action.
Based on the Applicable Performance Requirements and FI SEMS and capacity review, the project will be required to:
Develop a Social & Environmental Management System (SEMS), within 3 months of disbursement 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 are in compliance with the Applicable Performance Requirements.
Submit a periodic report to IFC as per a format to be provided by IFC. |
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| For inquiries about the project, contact: |
Mr. Eton Chester
Citizens Bank
201 Camp & Charlotte Streets
Telephone 592- 226-1705
Fax: 592- 2257363
Email: emchester@citizensbankgy.com
Georgetown, Guyana. |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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