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| Brazil SocGen |
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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 | 26319 |
| Company name | Societe Generale |
| Country | Brazil |
| Sector | Finance & Insurance |
| Environmental category | C |
| Department | Global Financial Markets Group |
| Status | Pend FAP |
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| Date SPI disclosed | November 6, 2007 |
| Projected board date | December 13, 2007 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
The project is to provide medium to long-term local currency funding support to Banco Cacique and Banco Pecunia, two tier II Brazilian banks and both subsidiaries of Société Générale S.A. (SocGen). Through a funding package of up to $314 million, IFC would help these institutions diversify their funding base and have access to the longer tenor financing they require to support the expansion of their consumer credit operations. They will be better positioned to develop new long term consumer finance products accessible to Brazilians in the low-income segment of the population.
Banco Pecunia specializes in consumer credit to low-income segments of the population. As of June 2007, it had total assets of $139 million, equity of $13 million and net loans outstanding of $111 million. It has a distribution network of 1,200 retail shops and 1,800 car dealerships.
Banco Cacique is a mid-sized consumer finance bank with total assets of $839 million as at June 2007. It had net loans of $479 million and equity of $197 million for the same period. It serves 600,000 active customers and has an extensive distribution network mainly in the states of Sao Paulo and Rio de Janeiro. |
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| Project sponsor and major shareholders of project company |
The project sponsor is Société Générale S.A.(SocGen), a leading French-based banking group with important market shares in core products and operations throughout the world. SocGen is a joint-stock company listed on the Paris stock exchange. Its stock is widely held, and there is no dominant shareholder. Its ratings of AA by Standard & Poor’s and Aa1 by Moody’s reflect the Group’s strong financial position, resulting from its diversified income, satisfactory core profitability and strong risk management. As of June 30, 2007, SocGen’s market capitalization was at EUR63.5 billion, and the Group’s shareholders’ equity at EUR30.1 billion. The Group has more than 120,000 employees worldwide.
In March 2007, Banco Pecunia was acquired by Galo Holding Company; itself owned 70% by SocGen and 30% by Banco Mais of Portugal. SocGen also purchased 100% of the shares of Banco Cacique in February 2007, and the transaction is expected to be finalized in the coming weeks. |
| Total project cost and amount and nature of IFC's investment |
| The proposed IFC investment consists of a combined package of A and B loans of up to $314 million to Banco Pecunia and Banco Cacique. The proceeds will be used to support the growth of SocGen’s subsidiaries’ consumer finance operations. |
| Location of project and description of site |
1) Based in Sao Paulo, Banco Pecunia, has a network of 3,000 points of sale mainly in the state of Sao Paulo, and also in the state of Rio de Janeiro.
2) Banco Cacique, headquartered in Sao Paulo, operates also in the states of Rio de Janeiro, Minas Gerais, Parana, Rio Grande do Sul and Santa Catarina. |
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| Anticipated development impact of the project |
Through this investment, IFC will continue to strongly support SocGen’s efforts in emerging markets financial services. The proposed project would also further cement IFC’s strong partnership with Société Générale globally and demonstrate an innovative approach to support emerging market finance worldwide. It will help:
- provide Brazilian consumers with better access to high standard banking services and products, and spur the growth of the consumer finance sector in Brazil;
- strengthen financial institutions by means of competition in the retail market, and
- promote innovation in Brazilian retail consumer finance markets through SocGen subsidiaries, which are using best market practices in areas such as staff training, marketing, credit policies and procedures, risk management techniques, product design and customer service. |
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| IFC's expected development contribution |
IFC’s contribution to this project is to:
- provide local currency medium to long-term funding that is otherwise unavailable in such large amounts in the Brazilian market to small and mid-sized financial institutions. Such funding will enhance these institutions’ ability to develop longer term consumer finance products to presently underserved segments of the market and foster increased competition;
- allow these institutions access to international capital markets by mobilizing sizeable term funding from foreign investors through the B Loan program. |
| Environmental and social issues - Category C |
| This project is engaged in the business of consumer finance and has provisionally been classified as a Category C project according to IFC’s Environmental and Social Review Procedure. The project is required to inform IFC in the event of any change in nature or scope of its present business or operations. |
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| For inquiries about the project, contact: |
M. Henri Bonnet, Executive Vice President
Specialized Financial Services Division
Retail Banking
Société Générale DSFS/DIR
92972 Paris - La Défense Cedex
Tel : +331 58 98 95 73
Fax : +331 42 14 09 33 |
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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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