DCM-BRAC Bank Affordable Housing Bond (IFC-42462)

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
Proposed
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
Jul 12, 2021
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
BRAC 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.
Potential Rights Impacts
  • Housing & Property
Only for projects receiving a detailed analysis, a broad category of human and environmental rights and frequently at-risk populations.
Investment Type(s)
Loan
The categories of the bank investment: loan, grant, guarantee, technical assistance, advisory services, equity and fund.
Investment Amount (USD)
$ 50.00 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.
Loan Amount (USD)
$ 50.00 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 May 5, 2022

Disclosed by Bank Oct 7, 2021

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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, the proposed investment comprises of a subscription of up to US$50 million equivalent in Bangladeshi Taka (BDT) in an up to 5-year, fixed rate, senior, non-convertible, unsecured, privately placed debt instruments to be issued by BRAC Bank Limited (‘BRAC Bank’, the ‘Bank’), the longest-standing IFC Financial Institutions Group client in Bangladesh. The proceeds will be used to provide housing finance facility, including affordable housing finance facilities to low and middle-income households. This is expected to be the first housing bond issued in Bangladesh.  The investment is expected to be supported by the International Development Association’s Private Sector Window (IDA PSW) and Local Currency Facility (LCF).BRAC Bank was established in 2001 and has a total asset of US$5.5 billion as of June 30, 2021. 

The Project is expected to contribute towards (i) increasing access to housing finance for urban households, with a focus on providing more access to housing finance to lower income households; and (ii) increasing the availability of longer-tenor housing finance in the market. At the market level, IFC will contribute via demonstration, replication and competition channels to: (i) integrating the housing finance sector with the local bond market and supporting the overall development of the corporate bond market; and (ii) fostering increased inclusiveness within the housing finance market by demonstrating the business case of moving down the market.

By providing longer term, local currency funding, IFC will support the Bank to broaden its housing finance outreach and provide housing loans with longer tenors, and enable the Bank to move down the market. This is expected to be Bangladesh's first housing bond and it will support both the growth of housing finance and stand out as an important milestone in the development of the country's domestic long-term bond markets. IFC's advisory support is expected to help the Bank to strengthen its business and operating models to identify segments for portfolio growth, enhance its product and services offering, and improve its customer service delivery. More specifically, IFC will assist the Bank to design and formally launch its affordable housing finance program.

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

IFC for its own account expects to subscribe to an up to US$50 million equivalent in BDT, up to 5-year, fixed rate, senior, unsecured, non-convertible, privately placed debt instruments to be issued by BRAC Bank, for the purpose of funding its housing finance facilities, including affordable housing finance facilities to low and middle-income households. Other investors may participate in subsequent/parallel bond issuances by the Bank, where the proceeds will also be used for the same purpose. The Project is expected to be supported by the IDA19 Private Sector Window Local Currency Facility (IDA PSW LCF).

 

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.

BRAC Bank’s key focus has been the small and medium enterprises (SME) segment, while offering the full range of banking products and services to the corporate and retail customers as well. BRAC Bank was the first Bangladeshi bank to be rated by S&P and Moody’s and is the highest rated Bangladeshi bank with a long-term rating of B+ (S&P) and Ba3 (Moody’s).

BRAC Bank was founded by BRAC, the largest non-governmental organization in the world. IFC was one of the original shareholders of the Bank and fully exited in 2017. BRAC Bank has been listed on the Dhaka and Chittagong stock exchanges since 2007. Currently, BRAC is the largest shareholder with a 46 percent stake in the Bank. Foreign investors hold 37 percent of the shares, while local institutions hold 11 percent and the public hold 6 percent.


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.

BRAC Bank Limited
Noman Nasir
Head of Financial Institutions Relationship
88 02 8801261
noman.nasir@bracbank.com
Anik Tower, Level-11, 220/B, Tejgaon-Gulshan Link Road, Dhaka 1208, Bangladesh
www.bracbank.com

ACCESS TO INFORMATION

You can submit a request for information disclosure at: https://disclosures.ifc.org/#/inquiries

If you believe that your request for information from IFC has been unreasonably denied, or that this Policy has been interpreted incorrectly, you can submit a complaint at the link above to IFC's Access to Information Policy Advisor, who reports directly to IFC's Executive Vice President.

ACCOUNTABILITY MECHANISM OF IFC/MIGA

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

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