City Bank Equity (IFC-34902)

Regions
  • South Asia
Geographic location where the impacts of the investment may be experienced.
Countries
  • Bangladesh
Geographic location where the impacts of the investment may be experienced.
Financial Institutions
  • International Finance Corporation (IFC)
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
Project Status
Approved
Stage of the project cycle. Stages vary by development bank and can include: pending, approval, implementation, and closed or completed.
Bank Risk Rating
FI
Environmental and social categorization assessed by the development bank as a measure of the planned project’s environmental and social impacts. A higher risk rating may require more due diligence to limit or avoid harm to people and the environment. For example, "A" or "B" are risk categories where "A" represents the highest amount of risk. Results will include projects that specifically recorded a rating, all other projects are marked ‘U’ for "Undisclosed."
Voting Date
Dec 1, 2015
Date when project documentation and funding is reviewed by the Board for consideration and approval. Some development banks will state a "board date" or "decision date." When funding approval is obtained, the legal documents are accepted and signed, the implementation phase begins.
Borrower
City Bank Limited
A public entity (government or state-owned) provided with funds or financial support to manage and/or implement a project.
Sectors
  • Finance
The service or industry focus of the investment. A project can have several sectors.
Investment Type(s)
Loan
The categories of the bank investment: loan, grant, guarantee, technical assistance, advisory services, equity and fund.
Investment Amount (USD)
$ 36.87 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Primary Source

Original disclosure @ IFC website

Updated in EWS Jul 25, 2018

Disclosed by Bank Feb 18, 2016

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Project Description
If provided by the financial institution, the Early Warning System Team writes a short summary describing the purported development objective of the project and project components. Review the complete project documentation for a detailed description.

According to IFC website, the project comprises an investment to take up to a 5% (post money) stake in common shares of The City Bank Ltd through a preferential allotment for a total investment amount up to BDT 1.32 billion (approximately US$17 million equivalent at current exchange rate). In addition to the common shares, the project will also include a 3-year senior loan for an amount of US$20 million, convertible to the Bank's common share at the expiry at IFC's option. The financing provided is a fit with the World Bank and IFC’s Financial Institutions Group strategy to strengthen financial institutions with equity capital, liquidity support and advisory services. The Bank commenced operations from 27th March 1983 and has total assets of US$2.6 billion as of September 30, 2015.

People Affected By This Project
People Affected By This Project refers to the communities of people likely to be affected positively or negatively by a project.

1. Impact on Financial Sector Development: The Bangladeshi financial sector is under-developed and the country''s banking system requires considerable improvement. The Project will promote financial intermediation by using the broad regional network of City Bank to reach SMEs. Additionally, this Project will create a demonstration model for existing banks, encouraging them to strengthen capital position, improve corporate governance and operational standards. The Project will promote further competition in the Bangladeshi banking sector by giving borrowers across the country greater access to banking products.

2. Supportive to Bangladesh FIG strategy: A key pillar of Bangladesh FIG strategy is strengthening the financial system through capital infusion in select banks and supporting improved corporate governance. Higher non-performing loans ("NPLs") and regulatory tightening (including BASEL III requirements) translates into higher capital needs. Various estimates peg banking sector capital requirements in excess of US$1 billion that will not be all available through domestic capital alone.

3. Support Corporate Governance Improvement Efforts: IFC would be supporting the Bank''s efforts to improve corporate governance, and other potential program as well could be explored with the Bank. An IFC-appointed director would be an important addition to the existing board.

4. Demonstration Effect: The IFC funding will encourage other investors to provide capital to the Bangladeshi banking sector to support asset growth.

Investment Description
Here you can find a list of individual development financial institutions that finance the project.

An equity investment of up to BDT 1.32 billion (approximately US$17 million equivalent at current exchange rate) in City Bank Limited for an equity stake of up to 5 percent on a fully diluted basis from IFC’s own account; and

A loan for IFC’s own account for up to US$20 million to City Bank Limited, convertible into equity shares in the Bank at IFC’s option.

Financial Intermediary
A financial intermediary is a bank or financial institution that receives funds from a development bank. A financial intermediary then lends these funds to their clients (private actors) in the form of loans, bonds, guarantees and equity shares. Financial intermediaries include insurance, pension and equity funds. The direct financial relationship is between the development bank and the financial intermediary.
Private Actors Description
A Private Actor is a non-governmental body or entity that is the borrower or client of a development project, which can include corporations, private equity and banks. This describes the private actors and their roles in relation to the project, when private actor information is disclosed or has been further researched.

The City Bank Limited provides financial products and services in Bangladesh. The company offers retail banking products and services, such as transactional and term deposit accounts; home, auto, secured, and personal loans; debit and credit cards, as well as SME, agent, Islamic, priority, and digital banking services; and supply chain finance services.

The present Board Chairman. Mr. Rubel Aziz is also a member of IDLC Finance Limited board and the Managing Director of Partex Beverage Limited, Partex Plastics Limited. Partex Jute Mills Limited, Partex Aviation Limited. Partex Properties Limited, Partex Accessories Limited, Partex Foundry Limited, New Horizon Farms Limited and New Era Milk Processing Limited. He is also a director of IBAIS University and several other Partex Group Companies. City Bank is publicly listed on Dhaka and Chittagong Stock Exchanges. It has a diversified shareholding with 43.43% of shares owned by the general public, 25.65% by local institutions and 2.05% by foreign investors. The remaining 28.87% is held by the Promoters and directors.


Contact Information
This section aims to support the local communities and local CSO to get to know which stakeholders are involved in a project with their roles and responsibilities. If available, there may be a complaint office for the respective bank which operates independently to receive and determine violations in policy and practice. Independent Accountability Mechanisms receive and respond to complaints. Most Independent Accountability Mechanisms offer two functions for addressing complaints: dispute resolution and compliance review.

Project Contact: Sheikh Mohammad Maroof
Deputy Managing Director & Head of Wholesale Banking, The City Bank Limited
136, Gulshan Avenue Gulshan-2, Dhaka-1212
Contact No.: +8802 8834767
Email Address: smaroof@thecitybank.com

Project Contact: Mohammad Mahbubur Rahman
Senior Executive Vice President & Chief Financial Officer, The City Bank Limited
136, Gulshan Avenue Gulshan-2, Dhaka-1212
Contact No.: +8802 58813126
Email Address: mrahman@thecitybank.com

ACCOUNTABILITY MECHANISM OF IFC

The Compliance Advisor Ombudsman (CAO) is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an IFC or MIGA- financed project. If you submit a complaint to the CAO, they may assist you in resolving a dispute with the company and/or investigate to assess whether the IFC is following its own policies and procedures for preventing harm to people or the environment. If you want to submit a complaint electronically, you can email the CAO at CAO@worldbankgroup.org. You can learn more about the CAO and how to file a complaint at http://www.cao-ombudsman.org/

How it works

How it works