The proposed investment consists of a senior loan of up to US$60 million to Banco del Pais, S.A. (BANPAIS or the Bank) in Honduras under the FIG COVID-19 Emergency Response WCS Envelope (WCS Envelope). The proposed WCS loan consists of a one-year senior loan facility, renewable for up to two additional years, to support the Bank’s working capital lending program to Honduran small and medium enterprises (“SMEs”) and women-owned SMEs (“WSMEs”).
IFC will provide expertise in improving the E&S Standards for BANPAIS and potentially capacity building in developing its value proposition for WSME and women clients.
The proposed Project will support BANPAIS’ SME financing, focusing on low to medium risk sub-projects and has been categorized as FI-2 according to the IFC's Sustainability Framework. The main E&S risks inherent in the Project derive from BANPAIS’ capacity to identify, assess, and manage risks associated with its SME portfolio, primarily composed of construction and real estate, agribusiness, manufacturing as well as wholesale and retail trade activities. These risks typically include occupational health and safety issues, labor and working conditions, child and forced labor, waste and wastewater management, land tenure, resource efficiency, pollution prevention, and impacts to vulnerable communities and biodiversity. The Project will not support higher risk E&S sub-projects and activities involving (a) involuntary resettlement; (b) adverse impacts on indigenous peoples; (c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage; (d) substantial occupational health and safety risks; (e) the conversion or degradation of natural habitats as defined by IFC PS 6 – “Biodiversity Conservation and Sustainable Management of Living Natural Resources”; or (f) category A or coal-related sub-projects. IFC’s applicable requirements for this Project will be the IFC Exclusion List and relevant host country E&S laws and regulations.
The project is expected to have a development impact in terms of increased access to working capital credit for SMEs and WSMEs in Honduras. The Facility is supporting BanPais' clients' capacity to sustain operations during an acute shock, supporting the private sector economic recovery process and shortening the time it will take for the most vulnerable to return to their traditional income-earning opportunities.
More than two years after the first COVID-19 infections, the pandemic continues to affect firms in a variety of ways, hindering a sustained recovery. Moreover, Honduras and the northern part of the country where BanPais operates were severely affected in 2020 not only by the COVID-19 pandemic but by the impact of hurricanes Eta and Iota, exacerbating the country’s intrinsic vulnerabilities. A return to pre-COVID-19 economic activity necessitates access to finance for SMEs to sustain and grow operations and economic activity.
The proposed investment will provide working capital to the Bank focusing the proceeds on the SME segment, facilitating loans to this segment and helping reduce the SME finance gap in the country.
The proposed investment consists of a one-year, renewable senior loan of up to US$60 million to BANPAIS under the WCS Envelope, with the funds being on-lent to the Bank’s SME and WSME clients.
BANPAIS is majority owned by Bicapital Corporation, the holding company of Bicapital Group and owner of Banco Industrial, the largest bank in Guatemala. Bicapital Group is one of the leading banking groups in Central America, with operations in 5 countries in addition to Honduras.
|Private Actor 1||Private Actor 1 Role||Private Actor 1 Sector||Relation||Private Actor 2||Private Actor 2 Role||Private Actor 2 Sector|
|Banco del Pais, S.A. (Banpais)||Subsidiary||-||owns||Banco Industrial Guatemala||Parent Company||Finance|
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