Banorte EQ

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

28213

Company name

Banco Mercantil del Norte, S. A. Institucion de Banca Multiple

Country

Mexico

(IDA)

Sector

Commercial Banking - General

Environmental category

Department

Reg Ind, Financial Markets, CAF/CLA

Status

Active

Date SPI disclosed	June 30, 2009
Projected board date	July 30, 2009
Date revised SPI disclosed	July 27, 2009
Previous Events	Invested: November 13, 2009 Signed: September 14, 2009 Approved: July 30, 2009

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The proposed IFC financing will be used to strengthen Banco Mercantil del Norte S.A., I.B.M (“Banorte” or “the Bank”), balance sheet to further expand its presence in Mexico’s most vulnerable segments of the economy and resume the lending activity in Mexico. Banorte is the 4th largest Mexican bank in terms of assets with a market share of 10.90%, the only locally owned among the five largest banks. The Bank serves more than 7 million customers and offers a wide array of products and services according to each type of customers’ needs (individuals, SMEs, corporates, and government entities).

Anticipated development impact of the project

- Expand the Bank’s presence in SME Finance;
- Expand the Bank’s presence in other priority sectors like agribusiness and housing (low and medium-income);
- Support the Bank’s activities in infrastructure finance; and
- Greater presence in climate change and sustainability initiatives.

IFC's expected development contribution

- Long term partnership with IFC that may provide a competitive advantage for the Bank in Climate Change and Sustainability initiatives;
- Support in adopting the Environmental and Social Standards as a differentiation strategy as well as developing a plan to reduce its own footprint; and
- Catalyst in mobilizing additional resources and help enhancing the client’s image and credibility in international financial markets.

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. IFC analyzed the FI portfolio and determined the Applicable Performance Requirements based on an analysis of the potential Social and Environmental risks associated with it.

The Applicable Performance Requirements are: The IFC FI Exclusion List; The applicable National Social and Environmental Laws and regulations; and the IFC Performance Standards. IFC will appraise the FI’s labor practices according to the IFC’s Performance Standards 2: Labor and Working Conditions and review the capacity of the FI to manage social and environmental risks. The IFC will review the bank's Social & Environmental Management System (SEMS) and, if necessary, suggest upgrades to ensure that the SEMS meets applicable requirements and cover all relevant financing operations.

Based on the review, the project will be required to: (i) Upgrade the Social & Environmental Management System (SEMS), prior to subscription, to the satisfaction of IFC; (ii) Identify responsible, qualified persons to manage and implement the SEMS; (iii) Commit to implement the SEMS, to ensure that its investments are in compliance with the Applicable Performance Requirements; (iv) Demonstrate commitment to applying the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions; and (v) Submit a periodic report to IFC as per a format to be provided by IFC.

IFC PROJECTS

RECENTLY DISCLOSED