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| FDC Remittance |
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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 | 28635 |
| Company name | Federacion de Cajas de Credito y Bancos de los Trabajadores |
| Country |
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| Sector | Microfinance and Small Business - Non Commercial Banking |
| Environmental category | FI |
| Department | Reg Ind, Financial Markets, CAF/CLA |
| Status | Active |
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| Date SPI disclosed | January 27, 2010 |
| Projected board date | February 26, 2010 |
| Previous Events | Invested: November 10, 2010
Signed: July 1, 2010
Approved: April 8, 2010 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| Fedecredito is a cooperative society, owned by 48 cooperative banks and 7 workers’ banks (the “Member Institutions” or “MIs”). The proposed investment of up to $30 million for up to 7 years is the first remittance-backed transaction for IFC, intended to provide funding to Fedecredito (“FDC”). IFC’s funding is intended to support FDC’s growing portfolio of consumer, residential and micro finance loans that are provided through its 55 member institutions. |
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| Project sponsor and major shareholders of project company |
| Fedecredito is a co-operative society with limited liability and variable capital. It is owned by owned by 55 member institutions. The member institutions are owned by their co-operative members (606,022 members as of September 2009). |
| Total project cost and amount and nature of IFC's investment |
| The proposed investment is remittance-backed lending of up to $30 million for up to 7 years. |
| Location of project and description of site |
| Fedecredito is headquartered in San Salvador. It has over 104 service points in 14 regions in El Salvador. |
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| Anticipated development impact of the project |
Scaling up microfinance: The project will help scale up financial institutions that provide financial services to the poor by providing FDC commercial funding to expand operations, enhance capacity, and increase outreach.
Demonstration effect: The project will further demonstrate the business case for microfinance, and encourage more lenders/investors to provide funding to FDC in the future.
Access to financial and non-financial services for micro-enterprises and low-income households: The project will benefit this target market, in terms of increased access to financial services which will stimulate business activity and create jobs.
Establish a precedent for FDC (as well as other similar entities which are recipients of/settlement platforms for offshore, hard currency, remittance flows and who focus on bottom-of-the-pyramid business activities) to obtain attractively priced, longer tenor, international funding based on remittance flows. |
| IFC's expected development contribution |
| IFC will play a catalytic role in establishing a funding approach that could be used in the future to raise additional attractively priced longer-tenor financing from other lenders/investors including IFIs, as well as private and public sector entities at a time when fundraising is particularly difficult. |
| Environmental and social issues - Category FI |
This project involves IFC support for a cooperative of Microfinance banks to provide loans for its members and has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.
Considering the nature of activities supported, the project will be required to:
- Develop a procedure relevant to its business process, prior to disbursement, that is satisfactory to IFC, and that ensures that all its investments are screened and processed to avoid supporting activities on the Microfinance exclusion list.
- Identify qualified persons to manage and implement the procedure.
- Commit to require borrowers to establish a similar screening process to avoid supporting activities on the IFC Microfinance Exclusion List.
- Demonstrate commitment and resources to implementing the procedure.
- Demonstrate commitment to applying the labor standards established by the IFC Performance Standard Labor and Working Conditions.
- 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: |
Ernesto Pacheco
Fedecredito
25 Av. Norte y 23 Calle Poniente, Edificio Macario Armando Rosales Rosa
San Salvador, El Salvador
Telephone: (503) 2209-9679 |
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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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