| Project Detail |
This summary covers equity investments by Abu Dhabi Commercial Bank PJSC (ADCB or the Group), in its subsidiary in Egypt, Abu Dhabi Commercial Bank - EGYPT S.A.E (ADCB-E or the Subsidiary). The investor has applied for a MIGA guarantee of up to USD237.5 million for capital optimization cover for a period of up to 3 years (the Project).
The ADCB Group is one of the UAE’s leading financial institutions, based in Abu Dhabi, UAE. Serving around 2 million customers with a wide range of market-leading products and services, the ADCB Group’s core businesses are Retail Banking, Corporate & Investment Banking and Treasury & Investments. With a host of award-winning digital solutions and market firsts, the ADCB Group is driving digital innovation in the financial services industry, helping provide the highest levels of service and convenience to its customers and partners. The ADCB Group operates major financial and non-financial subsidiaries. These subsidiaries include Al Hilal Bank, providing Islamic banking services for retail customers, and ADCB Egypt, providing both corporate and retail banking services. The ADCB Group is 60.69% owned by the Government of Abu Dhabi through Mubadala Investment Company through its wholly owned subsidiary One Hundred and Fourteenth Investment Company – Sole Proprietorship LLC and trades on the Abu Dhabi Securities Exchange (ADX) under the ticker “ADCB”. Further information on the ADCB Group can be found at www.adcb.com
ADCB-E, a 100% subsidiary of the ADCB Group since 2019, offers a universal range of products and services, catering to both retail and corporate clients, across 50 branches.
Environmental Categorization
ADCB Egypt provides retail, small and medium enterprise, and corporate finance services to clients in Egypt. The MIGA guarantee will support key segments within the bank’s lending activities. ADCB-E’s portfolio is considered medium risk as the sectors financed and types of transactions have limited environmental and social (E&S) risks and impacts, or impacts that are few in number, site-specific, largely reversible and can be readily addressed through mitigation sectors. Long-term corporate loans to clients in potentially high-risk sectors is limited. This project has thus been categorized as FI-2 in accordance with MIGA’s Policy on Environmental and Social Sustainability (2013).
The main E&S aspects of this project relate to ADCB-E’s ability to identify, assess, and manage the E&S risks and impacts associated with its lending activities and the management of labor and working conditions at ADCB-E. MIGA analyzed ADCB-E’s portfolio for types of transactions, tenors, sectors, and exposure to MIGA’s Exclusion List. MIGA also analyzed ADCB-E’s E&S risk management procedures for lending activities against the requirements of Performance Standard 1: Assessment and Management of Environmental and Social Risks and Impacts (PS1), and labor practices in line with the requirements of Performance Standard 2: Labor and Working Conditions (PS2).
For the purposes of the MIGA guarantee, ADCB-E will be required to assess the targeted asset class against: (i) MIGA Exclusion List; and (ii) applicable E&S laws and regulations in Egypt. Eligible corporate loans will also be assessed against MIGA Performance Standards.
As of December 2023, ADCB-E’s portfolio included the following business segments: corporate loans, 51% (long-term – 9.4% and short-term – 41.7%); trade finance, 25.4%; retail/consumers loans, 16.5%; financial institutions – 3.7%; and small and medium enterprise loans, 3.3%. The main sectors financed include construction and building, financial services, chemicals, agriculture and forestry, real estate, food and beverage, and wholesale and retail trade. ADCB-E has no exposure to activities on the MIGA Exclusion List or coal-related projects. The bank has exposure to oil and gas activities – most of the transactions are short-term transactions.
In relation to E&S risk management, ADCB Group has an Environmental and Social Risk Management Policy which was adopted by ADCB-E in October 2023. The policy covers E&S risk identification, assessment, and monitoring as part of the bank’s credit cycle. The policy also references excluded and restricted activities as well as the application of the MIGA Performance Standards to Equator Principles transactions and high-risk sectors. ADCB-E will be required to update the list of excluded activities to include all activities on the MIGA Exclusion List and revise the scope of application of the MIGA Performance Standards to include eligible corporate loans in line with MIGA’s requirements. In addition, in line with PS1, ADCB-E will be required to develop and implement an external communication mechanism for receiving and addressing E&S concerns raised by third parties about projects financed by the bank.
MIGA’s review of ADCB-E’s emergency preparedness and response measures, revealed that the measures are in line with the requirements of PS1. MIGA’s review of the bank’s labor policies and procedures also indicated alignment with the requirements of PS2. ADCB-E has labor policies and procedures that address terms of employment, recruitment, renumeration, benefits, grievance management and non-discrimination.
For the proposed guarantee, ADCB-E will be required to report annually to MIGA regarding the bank’s portfolio, the implementation of the E&S procedures as well as labor practices. |
