Banco del Estado de Chile

Project Description 

On October 29, 2025, The Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group, signed a US$758.26 million guarantee effective November 6, 2025, providing Non-Honoring of Financial Obligations by a State Owned Enterprise (NHFO-SOE) coverage to JPMorgan Chase Bank, N.A., HSBC Bank plc and Standard Chartered Bank for their 15-year non-shareholder loans, totaling US$500 million of principal, to Banco del Estado de Chile (BancoEstado).  

MIGA’s NHFO-SOE instruments are being used to support various priority lending programs that are central to BancoEstado’s social mission, including, climate finance initiatives, micro and small enterprises, subsidized mortgages for low and middle-income households and women financial inclusion and empowerment (the Project).  

BancoEstado is the only state-owned bank in Chile and was established with the public-policy mandate to foster the development of Chile’s economic activities through banking and financial services. It is dedicated to promoting financial inclusion by serving lower-income segments facing greater barriers to accessing private sector services, and by maintaining the widest physical presence as the only financial institution present in one third of the provinces (comunas) of Chile. As of June 30, 2025, the entity was the largest financial institution in Chile by client number and geographic coverage, and the third largest by loans.  

Additionally, aligning with the Government of Chile's (GoC) sustainability and decarbonization goals, BancoEstado has strengthened its commitment to green and sustainable development. This includes promoting climate-focused financial products, reducing emissions with priority sector clients, developing a decarbonization plan for its portfolio, and enhancing specialized risk units to evaluate environmental, social, and climate risks. 

Environmental Categorization 

BancoEstado provides financial services to individuals and companies across various sectors in Chile. The Project involves targeted loans to the following asset classes: (i) climate finance; (ii) working capital and credit lines for micro and small enterprises; (iii) subsidized mortgages for low-income households; and (iv) women financial inclusion and empowerment. These transactions are mostly considered to have potentially limited adverse environmental and social (E&S) risks or impacts that are site-specific, reversible, and can be addressed through mitigation measures. The Project portfolio is thus considered medium risk, and the Project is categorized as FI-2 under MIGA’s Policy on Environmental and Social Sustainability (2013).    

MIGA analyzed BancoEstado’s portfolio and the Project portfolio by types of transactions, tenor, size, industry sectors, and exposure to MIGA’s Exclusion List. BancoEstado offers personal banking, credit and debit cards, consumer credit, insurance, mortgages, trade finance, liability management, payment and treasury services to its various clients, including individuals, MSMEs, corporate and government entities. The main business segments are retail banking/consumer loans, MSMEs, corporate finance, project finance, and financial intermediaries. The main sectors financed include retail commerce, construction, transportation, telecommunication and storage, manufacturing, corporate and real estate services, wholesale trade, social services, student loans, financial services and agriculture. BancoEstado has limited exposure to activities on the MIGA Exclusion List. 

The main E&S risks of this Project are associated with BancoEstado’s ability to identify, assess, and manage the E&S risks of its financing activities. The applicable E&S requirements for the MIGA Project portfolio will be: (i) MIGA’s Exclusion List; (ii) applicable national environmental and social laws and regulations in Chile; and (iii) the MIGA Performance Standards (for eligible corporate loans). 

MIGA assessed BancoEstado’s E&S risk management procedures in line with the requirements of MIGA’s Performance Standard 1: Assessment and Management of E&S Risks and Impacts (PS1), and also assessed the bank’s labor practices in line with MIGA’s Performance Standard 2: Labor and Working Conditions (PS2).  

In relation to E&S risk management, BancoEstado has an E&S and climate-related risk policy and an E&S management system (ESMS) for identifying and managing the E&S risks and impacts associated with the activities of the clients financed by the bank. The bank also has an E&S team responsible for the implementation of the ESMS. The implementation of the ESMS commenced in 2019 and the ESMS was updated in 2023. The ESMS is primarily focused on the assessment of E&S risks and impacts associated with activities of clients involved in high-risk activities and large transactions. The activities are screened against BancoEstado’s list of excluded activities, national E&S laws, the Equators Principles, and elements of the MIGA Performance Standards. Where applicable, E&S action plans are developed to address identified gaps. In line with MIGA’s requirements for financial intermediaries, BancoEstado will incorporate MIGA’s Exclusion List and broaden the scope of implementation of the ESMS in the lending activities covered by the MIGA Project to ensure that these activities are assessed in line with the E&S requirements for this Project. BancoEstado will develop and implement an external communication mechanism for receiving and addressing E&S concerns from the public about the projects financed by the bank in line with MIGA PS1. 

MIGA’s review of the bank’s emergency preparedness and response plan and life and fire safety measures revealed that the plan and the measures are in line with the requirements under MIGA PS1.  

In relation to PS2, MIGA’s assessment revealed that BancoEstado’s labor policies are in line with the requirements of PS2 and national labor laws in Chile. The bank’s policies cover amongst other aspects, terms of employment, grievance management, discipline, workers’ organization, harassment, training and development, performance management and non-discrimination. 

For the issued guarantee, BancoEstado will report annually to MIGA regarding the implementation of the E&S procedures for the Project portfolio, as well as its labor practices. 

Development Impact  

The Project aims to support increased lending for micro and small enterprises in Chile, which are an important pillar of the country’s economy for development and employability, as well as subsidized mortgages for lower-income households, contributing to inclusive homeownership. The Project contributes to increased lending to women across these focus areas as Chile lags peers in terms of financial inclusion of women, despite being a high-income country. In addition, it supports increased climate finance lending for mitigation and adaptation activities, contributing to the GoC’s sustainability and decarbonization goals. It also provides demonstration effects associated with the adoption of inclusive business models and climate mitigation and adaptation measures. 

The Project is consistent with the WBG Country Partnership Framework (CPF) for Chile over the FY24-FY27 period, as it supports the two High-Level Outcomes (HLOs) of (i) Improved quality and inclusiveness of social and financial services, and (ii) Improved environmental sustainability and climate change resilience, by targeting increased lending for lower-income households, women, micro and small enterprises, and financing for climate mitigation and adaptation activities.    

The Project, which is gender flagged, additionally aligns with the WBG Gender Strategy 2024-2030 objectives of economic empowerment by addressing gender gaps in financial inclusion and enhancing women's access to financial resources. BancoEstado’s commitment to allocate a portion of the MIGA-enabled lending to women and women-owned small and micro enterprises contributes to the WBG target of providing capital to 80 million more women and women-led businesses by 2030.