Home Projects Project Data Sheet
|Termination Date||07 Feb 2011|
|Borrower/Equity Investment Name||SECURITY BANK CORPORATION|
|Type of ADB Assistance / Amount||
Private Sector Development
Private Sector Development
|Sector/Subsector||Finance / Small and Medium Enterprise Finance and Leasing|
|Responsible ADB Department||Private Sector Operations Department|
|Responsible ADB Division||Capital Markets and Financial Sectors Division|
|Responsible ADB Officer||Mary Abad|
Various Private Sector Commercial Banks for the PCG;
Bangko Sentral ng Pilipinas
Other PS Participants for the Equity Investment in CIB
|Description||PSOD is proposing two components under the Public Sector's proposed SME Development Support Project (PHI 37764-01). First a Partial Credit Guarantee (PCG) Facility will be established for selected private financial institutions to enable them to provide local currency loans to small and medium-sized enterprises. ADB will establish a 50:50 risk sharing arrangement with the participating financial institutions (PFI) by issuing PCGs without a counter-guarantee from the Government. A sub limit of up to $10 million equivalent will be set up for each PFI. All PFIs must have proven ability and willingness to extend local currency loans to SMEs and follow prudent credit evaluation and due diligence guidelines acceptable to ADB. It is expected that the PCGs will be used to guarantee up to 50% of loans ranging from $100,000 to $500,000 per borrower.
Second, PSOD is proposing an equity investment of up to $1 million (not to exceed 25% of total project cost) in the credit information bureau (CIB) , which is intended to function as the repository of all relevant credit information of corporate, individual, SME and microfinance borrowers. CIB is proposed to be established under the Credit Information Systems Act (CISA), which is currently being discussed in Congress and Senate. It will be established as a separate private sector entity under the Corporation Code. BSD intends to own up to 40% of the shares and 51% will be owned by industry associations, international financial institutions and other private sector investors.
|Objectives and Scope||The objective of the PCG facility under the Project is two-fold: first to leverage through a market-based approach existing financial resources of the financial system for lending to an SME segment currently underserved by participating financial institutions ( PFIs); and second, to provide catalytic support for innovative financial products and approaches in new and less familiar markets. Once successfully tested, such products will be expanded among a large number of PFIs. The expected outcome of the PCG facility is a higher volume of SME lending by commercial PFIs in the Philippines.
The establishment of CIB, assists in the development of a sound credit risk management practice among the lenders and borrowers, consequently contributing to a more stable and efficient financial system in the country. The lenders' improved access to accurate and reliable credit information will enable them to make more informed credit decisions while strengthening credit discipline of the borrowers. The availability of consolidated credit information also reduces processing time and costs to the lenders, which is expected to, in turn reduce financing cost of the borrower.
|Status of Development Objectives||Guarantee Facility Deed signed on 26April 2007. ADB exposure expected to commence in 1Q2008 following the approval in January 2008. of two Qualifying Instruments under the Univeral Robina Corp (URC) Program. Evaluation of candidate participating financial institutions (PFIs) to be conducted.|
|Timetable for assistance design, processing and implementation|
|Private Sector Credit Committee Meeting||14 Feb 2005|
|Board Approval||29 Sep 2005|
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