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| Fransabank s.a.l. SME Risk Sharing and Corporate Credit Line |
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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 | 25878 |
| Company name | Fransabank SAL (Fransabank) |
| Country | Lebanon |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Active |
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| Date SPI disclosed | January 29, 2007 |
| Projected board date | March 3, 2007 |
| Previous Events | Invested: November 6, 2007
Signed: June 20, 2007
Approved: March 23, 2007 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
The project involves IFC providing a senior corporate credit line and SME risk sharing facility to Fransabank s.a.l. (Fransabank or the Bank) of up to $50 million in total, to be on-lent to the Bank’s existing and new clients as a response to the post conflict needs in Lebanon.
This project is part of the Lebanon Rebuild Program: IFC’s first phase investment response – as part of IFC’s corporate-wide strategy – to the reconstruction needs in post-conflict Lebanon. Through this program IFC will provide investments to up to five selected banks in Lebanon, either in the form of credit lines or risk management facilities or both, in the amount of up to $200 million in aggregate.
Headquartered in Beirut - Lebanon, Fransabank was established in 1921 and is now the fifth largest private bank in terms of total assets ($4.9 billion in consolidated total assets as of December 31, 2005). It also ranks third by return on assets and cost to income and fourth by return on shareholders’ equity.
Fransabank has pursued over the past few years and achieved a strategy to become a full-service financial institution, ‘a universal bank’. The Bank provides a wide range of commercial and retail banking and related financial services primarily to Lebanese individuals and private sector companies and, increasingly, to foreign companies seeking to operate in Lebanon. The Bank also provides specialized financial services such as private and investment banking through its fully owned investment banking subsidiary, Fransa Invest Bank sal, lease financing through its subsidiary, the Lebanese Leasing Company sal, selected and very well planned insurance products through its subsidiary Bancassurance sal. |
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| Project sponsor and major shareholders of project company |
The project sponsor is Fransabank. The main shareholders of the Bank are:
Mr. Adnan and Adel Kassar - 72%
Credit Agricole, France - 6%
DEG, Germany - 5%
Sheikh Abdel Kader Al Fadl - 2.7%
The Public Institution for Social Security, Kuwait - 2% |
| Total project cost and amount and nature of IFC's investment |
| Total project cost is estimated up to $50 million, which will be covered under the proposed IFC investment of the said amount of A loan for IFC’s own account. |
| Location of project and description of site |
The Bank’s headquarters are in Beirut, Lebanon. It currently operates through 60 branches nationwide and employs about 1,170 staffs. The Bank has also a subsidiary bank in France, Fransabank (France), and within its strategy of regional expansion, it has acquired in 2006, a stake of 20% in the capital of a new Islamic Bank in Sudan, named Capital Bank. Fransabank has founded Fransabank El Djazaïr and maintains 68% in its share capital Fransabank El Djazaïr has started its activities in October 2006.
Fransabank was also granted the preliminary approval to enter the Syrian banking market.
The Bank maintains strong correspondent banking relationships with prominent international banks worldwide. |
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| Anticipated development impact of the project |
- Maintain and/or increase bank lending:
With the destruction and economic downturn in Lebanon, private banks may reduce their loan exposures at the expense of SMEs, corporations and consumers. Any such reduction would cause loss of jobs and increases in the poverty rates. The proposed IFC investment should help maintain and/or increase bank lending to these groups, maintaining the economic well being of the underlying communities/stakeholders.
- Support for the private sector lending including SMEs and corporate clients:
SMEs and corporate clients make up a large share of Lebanon’s economic output and including vital contributions such as employment generation in impoverished area. Increased access to finance to these target markets can re-start these currently under funded enterprises. |
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| IFC's expected development contribution |
IFC will offer investment and mobilizing activities with the near term benefits to enable the private sector companies; helping the economy to restart and avoid economic downturn caused by the conflicts.
IFC’s role is to provide a range of interventions over the near and medium term in post-conflict Lebanon, including the proposed credit line facility, risk sharing initiative and trade finance program, through commercial banks.
IFC’s program is designed to be an effective and timely response to provide the needed funding, up to $200 million, to support the private sector through the anticipated difficulties as a result of a recent conflict. |
| 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 will analyze the Bank's portfolio, and the activities proposed to be supported with IFC financing for types of transactions, size, tenor and industry sectors and determine the Applicable Requirements, if any, that would include a combination of:
- The IFC FI and/or Microfinance Exclusion Lists; and/or
- The applicable National Social and Environmental Laws and regulations.
IFC will also review, if required, the capacity of the Bank to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in the SEMS.
Based on the review, Fransabank will be required to:
- Develop an, or upgrade, if necessary, any existing Social & Environmental Management System (SEMS), prior to disbursement to the satisfaction of IFC and Fransabank.
- 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 Requirements.
- Commit to take action to remedy any gaps in SEMS implementation on an ongoing basis.
- 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: |
Ms. Mona Khoury, Head
International Fransabank s.a.l.
P.O. Box 11-0393, Beirut, Lebanon
Telephone: (01) 340180/8
Fax: (01) 341273 |
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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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