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| This Summary of Project Information 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. |
Summary of Project Information (SPI) |
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| Project number | 10563 |
| Project name | Bangladesh Trade Enhancement Facility |
| Country | Bangladesh |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | Bangladesh Trade Enhancement Facility |
| Environmental category | C |
| Date SPI disclosed | October 25, 2000 |
| Projected board date | December 10, 2000 |
| Status | Completed |
| Previous Events | Signed: February 2, 2001
Approved: December 18, 2000 |
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| Project sponsor and major shareholders of project company |
Standard Chartered Bank London, through its various branches, will act as the confirming bank in this facility. Standard Chartered Bank (SCB) is one
of the top UK commercial banks. Headquartered in London, SCB operates through a wide network of local branches and subsidiaries in Asia, Africa,
and Latin America. Asia Pacific makes up two-thirds of its total assets of £ 59 billion. It has 740 offices in more than 55 countries. For the first
half of 2000, SCB posted a profit of £235 million (1H99 £183 mn) after provisions of £164 mn (1H99 £240 mn). As of June 20, 2000, the Tier 1 risk-weighted capital ratio was 9.3% (8.9% as of 1999). It has a diverse portfolio of strong franchises in emerging countries, especially Hong Kong and Southeast Asia. It emerged stronger from the recent financial crises in some of these countries, taking advantage of the new
opportunities presented. It has acquired Nakornthon Bank in Thailand, the large Grindlays business in India and the
Chase consumer banking business in Hong Kong. In Bangladesh it has merged with the local Grindlays branch, which was also
active in trade finance. |
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| Total project cost and proposed IFC investment |
| The total guarantee amount is estimated at US$52 million with IFC's exposure being upto 50% of the facility. |
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| Location of project and description of site |
SCB is headquartered in London but will be confirming letters of credit issued by private sector businesses in Bangladesh through private sector
commercial banks. SCB operates through a wide network of local branches and subsidiaries in Asia, Africa, and Latin America: Asia Pacific makes up
two-thirds of its total assets of £ 59 billion. It has 740 offices in more than 55 countries.
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| Description of company and purpose of project |
The project involves the establishment of a two-year US$52 million guarantee facility in Bangladesh to be established by IFC and Standard Chartered Bank plc. The objective is to meet the increasing demand for trade finance and the need for longer tenors in the local market. The facility is designed to guarantee documentary credits originated by selected private sector commercial banks in Bangladesh.
IFC Role: (i) IFC will play a strong role in increasing the availability of short-term trade finance to Bangladeshi importers and exporters by helping supplement country limits currently available to commercial banks operating in the country. This is particularly important as export growth continues. It is also in line with the World Bank’s strategy for Bangladesh. (ii) Through its participation in the project, IFC will help promote confidence in the private banking sector and will help build the reputation of Bangladeshi banks in international markets. A further and longer term benefit could be reduced costs for trade finance as confidence in local banks increases. (iii) IFC will also play a role in assisting local banks improve their reporting through its requirement that participant banks provide regular financial and other related reports to IFC.
Development Impact: (i) Benefits to banks: The project will result in the transfer of trade finance related skills and know-how from SCB to selected local banks; SCB and IFC plan a series of seminars and training programs for local banks focused on documentary credits. Locally, this will result in capacity building in the trade finance sector in Bangladesh. Internationally, this will familiarise foreign commercial banks with Bangladeshi banks and help enhance their reputations. (ii) Benefits to exporters and importers: The project will improve and increase access to trade finance for exporters and importers who have, thus far, been constrained by the limited availability of trade finance particularly for the over 180 day category of documentary credits. |
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| Environmental and social issues - Category C |
This is a Category C project, according to IFC’s Procedure for Environmental and Social Review of Projects, because it is likely to have minimal or no adverse environmental impacts.
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| To contact the project company, please write to: |
| maijazuddin@ifc.org, david.kempton@uk.standardchartered.com |
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