| Project Detail |
MIGA issued a guarantee totaling US$584.6 million covering loans from JPMorgan Chase Bank, N.A., HSBC Bank plc and Standard Chartered Bank to Banco Nacional de Panamá (BNP). MIGA’s coverage has been sought in relation to a Non-Honoring of Sovereign Financial Obligations by a State-Owned Enterprise (NHSOE) guarantee for a period of up to 5 years and 1 month.
The MIGA-guaranteed loans are being used by BNP to support increased access to credit to micro, small and medium enterprises (MSMEs) as well as for the expansion of mortgage lending to lower income households in Panama. As the largest state-owned bank in the country, BNP is a key agent in helping the Government of Panama ensuring access to financing across the country. This is the second transaction with BNP after MIGA provided support to the bank in 2020 to raise financing from international commercial banks in response to the COVID-19 crisis.
Environmental Categorization
The Project involves targeted loans to MSMEs and lower income mortgages. Lower income mortgages and MSME activities typically have low to medium environmental and social (E&S) risks and impacts which can be addressed through mitigation measures. This Project has thus been categorized as FI-2 according to MIGA’s Policy on Environmental and Social Sustainability (2013).
The main E&S aspects of this project relate to BNP’s ability to identify, assess, and manage the E&S risks and impacts associated with its lending activities and the management of labor matters at BNP. MIGA analyzed BNP’s portfolio for types of transactions, tenors, sectors, and exposure to MIGA’s Exclusion List. MIGA also analyzed BNP’s E&S risk management procedures for lending activities in line with the requirements of Performance Standard 1: Assessment and Management of Environmental and Social Risks and Impacts (PS1), and BNP’s labor practices in line with the requirements of Performance Standard 2: Labor and Working Conditions (PS2). For the purposes of the MIGA guarantee, BNP will assess SME transactions against: (i) MIGA Exclusion List; and (ii) applicable E&S laws and regulations in Panama.
As of December 2023, BNP’s portfolio included the following sectors/types of loans: residential mortgages, 35%; personal loans, 20%; public sector loans, 13%; commercial loans, 15%; agriculture loans, 9%; financial institutions, 7%; and industrial loans, 1%. BNP has no exposure to activities on the MIGA Exclusion List or coal-related projects.
BNP is an existing client and in relation to E&S risk management, BNP implements an E&S risk management system for identifying, assessing, and managing E&S risk and impacts associated with its lending activities. The system covers screening against the exclusion list; assessment of E&S risks and impacts; compliance with local E&S laws as well as identification of E&S conditions of lending as required. BNP also has emergency response procedures which are in line with the requirements of PS1. BNP also has labor policies and procedures that address terms of employment, recruitment, renumeration, benefits, grievance management and non-discrimination.
BNP will report annually to MIGA regarding the project portfolio, the implementation of the E&S procedures as well as labor practices. |
