Standard Chartered Capital Optimization
Project description
Guarantees for new and existing equity investments by Standard Chartered Plc (SCB or the Group) in its subsidiaries in Ghana, Pakistan and Zambia against the risk of Expropriation of Funds of mandatory reserves held at the respective host country central banks. This would enable SCB to obtain capital relief on its risk-weighted assets and use the freed-up capital to support the subsidiaries’ growth. The investor has applied for a MIGA guarantee of an aggregate amount of USD160 million (USD 70 million for SCB’s subsidiary in Ghana, USD 50 million for the subsidiary in Pakistan, USD 40 million for the subsidiary in Zambia) for a period of up to 3 years.
With a 172-year history, SCB is a leading UK-based multinational bank operating in 54 markets across the world. It is listed on the London Stock Exchange and the Hong Kong Stock Exchange. Major SCB shareholders include Temasek Group, BlackRock and Vanguard Group. The company is a constituent of the FTSE 100 Index and is rated A3 (Positive) by Moody’s, BBB+ (stable) by S&P, and A (stable) by Fitch.
Environmental Categorization
Ghana
SCB Ghana offers financial products and services to SMEs, corporate clients and individuals in Ghana. The MIGA guarantee will support trade finance and short term corporate loans. These transactions are considered to be mostly medium risk, with potentially limited adverse E&S risks and impacts that are site-specific, reversible and can be addressed through mitigation measures. Transactions with significant adverse E&S risks and impacts will be excluded from the MIGA project. The Project is thus categorized as FI-2 in accordance with MIGA’s Policy on Environmental and Social Sustainability (2013).
The main E&S risks of this Project are associated with SCB Ghana’s ability to identify, assess, and manage the E&S risks of its financing activities and the Bank’s labor practices. The applicable E&S requirements for the MIGA Project portfolio will be: (i) the MIGA Exclusion List; (ii) applicable E&S laws in Ghana, (iii) sector specific screening for agriculture.
MIGA analyzed SCB Ghana’s portfolio by types of transactions, tenor, size, industry sectors, and exposure to MIGA’s Exclusion List. As of December 2024, SCB Ghana’s portfolio included the following business segments – corporate finance (mainly short-term) (76%), retail banking (23%) and SMEs (1%). The main sectors supported include services, manufacturing, commerce and finance, agriculture, forestry and fishing. SCB Ghana currently has no exposure to activities on the MIGA Exclusion List.
MIGA assessed SCB Ghana’s E&S policies and procedures in line with the requirements of MIGA 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 Performance Standard 2: Labor and Working Conditions (PS2).
In relation to E&S risk management, SCB Ghana implements SCB Group E&S policies and procedures. SCB Group has been an Equators Principles financial intermediary since 2003. SCB Group has an Environmental and Social Risk Management Framework. The framework includes a procedure forinclude identifying, assessing and managing E&S risks associated with clients and transactions SCB’s framework also includes the application of the Performance Standards for Equator Principles transactions, as well as establishing E&S action plans for the identified gaps. The framework includes position statements on cross-sector issues (climate change, human rights and nature) and sensitive sectors (agribusiness, chemicals and manufacturing, extractive industries, infrastructure and transport, power generation, and thermal coal) that clients and transactions are assessed against. SCB Group has a Prohibited Activities List (October 2024), which is not fully aligned with the activities on MIGA’s Exclusion List. SCB Ghana has designated E&S representatives from its relationship management and credit teams to oversee the implementation and monitoring of the SCB Group’s framework. Ghana E&S representatives receive appropriate training and support from the SCB Group’s E&S team as needed. For the MIGA Project, SCB Ghana will be required to include MIGA’s Exclusion List within its E&S procedures.
MIGA reviewed the SCB Ghana’s emergency response procedures and found them to be in line with the requirements of MIGA PS1. In relation to PS2, MIGA’s assessment revealed that SCB Ghana’s labor policies and procedures are in line with the requirements of PS2 and national labor laws in Ghana. SCB Group policies and procedures cover amongst other aspects, terms of employment, performance management, benefits and renumeration, workers’ representations, occupational health and safety, wellbeing, harassment, non-discrimination and grievance mechanism.
For the proposed guarantee, SCB Ghana will report annually to MIGA regarding the implementation of the E&S procedures for the Project portfolio, as well as its labor practices.
Pakistan
SCB Pakistan offers financial products and services to corporate and SME clients and individuals in Pakistan. The MIGA guarantee will support trade finance and Short term corporate loans. These transactions are considered to be mostly medium risk, with potentially limited adverse E&S risks and impacts that are site-specific, reversible and can be addressed through mitigation measures. Transactions with significant adverse E&S risks and impacts will be excluded from the MIGA project. The Project is thus categorized as FI-2 in accordance with MIGA’s Policy on Environmental and Social Sustainability (2013).
The main E&S risks of this Project are associated with SCB Pakistan’s ability to identify, assess, and manage the E&S risks of its financing activities and the Bank’s labor practices. The applicable E&S requirements for the MIGA Project portfolio will be: (i) the MIGA Exclusion List; (ii) applicable E&S laws in Pakistan and (iii) sector specific screening for agriculture.
MIGA analyzed SCB Pakistan’s portfolio by types of transactions, tenor, size, industry sectors, and exposure to MIGA’s Exclusion List. As of December 2024, SCB Pakistan’s portfolio included the following business segments – corporate finance (mainly short-term, 76.9%), retail banking/consumer loans (21.2%), and SMEs (1.9%). The main sectors supported include textiles; services; food and beverages; wholesale and retail trade; electrical equipment, appliances and components, chemicals, construction and real estate. SCB Pakistan currently has limited exposure to activities on the MIGA Exclusion List. The Bank also has exposure to palm oil and coal-related projects. SCB Group has committed to achieving net zero emissions by 2050, in their financing activity.
MIGA assessed SCB Pakistan’s E&S policies and procedures are in line with the requirements of MIGA 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 Performance Standard 2: Labor and Working Conditions (PS2).
In relation to E&S risk management, SCB Pakistan implements SCB Group E&S policies and procedures. SCB Group has been an Equators Principles financial intermediary since 2003. SCB Group has an Environmental and Social Risk Management Framework. The framework includes a procedure for identifying, assessing and managing E&S risks associated with clients and transactions SCB’s framework also includes the application of the Performance Standards for Equator Principles transactions, as well as establishing E&S action plans for the identified gaps. The framework includes position statements on cross-sector issues (climate change, human rights and nature) and sensitive sectors (agribusiness, chemicals and manufacturing, extractive industries, infrastructure and transport, power generation, and thermal coal), both clients and transactions are assessed against these statements. SCB Group has a Prohibited Activities List (October, 2024), which is not totally aligned with the activities on MIGA’s Exclusion List. SCB Pakistan has designated E&S representatives from its relationship management and credit teams to oversee the implementation and monitoring of the SCB Group’s framework. Pakistan E&S representatives receive appropriate training and support from the SCB Group’s E&S team as needed. For the MIGA Project, SCB Pakistan will be required to include MIGA’s Exclusion List within its E&S procedures.
MIGA reviewed the SCB Pakistan’s emergency response procedures and found them to be in line with the requirements of MIGA PS1. In relation to PS2, MIGA’s assessment revealed that SCB Pakistan’s labor policies and procedures are in line with the requirements of PS2 and national labor laws in Pakistan. SCB Group’s policies and procedures cover amongst other aspects, terms of employment, performance management, benefits and renumeration, workers’ representations, occupational health and safety, wellbeing, harassment, non-discrimination and grievance mechanism.
For the proposed guarantee, SCB Pakistan will report annually to MIGA regarding the implementation of the E&S procedures for the Project portfolio, as well as its labor practices.
Zambia
SCB Zambia offers financial products and services to corporates and individuals in Zambia. The MIGA guarantee will support trade finance and short term corporate loans . These transactions are considered to be mostly medium risk, with potentially limited adverse E&S risks and impacts that are site-specific, reversible and can be addressed through mitigation measures. Transactions with significant adverse E&S risks and impacts will be excluded from the MIGA project. The Project is thus categorized as FI-2 in accordance with MIGA’s Policy on Environmental and Social Sustainability (2013).
The main E&S risks of this Project are associated with SCB Zambia’s ability to identify, assess, and manage the E&S risks of its financing activities and the Bank’s labor practices. The applicable E&S requirements for the MIGA Project portfolio will be: (i) the MIGA Exclusion List; (ii) applicable E&S laws in Zambia and (iii) sector specific screening for agriculture.
MIGA analyzed SCB Zambia’s portfolio by types of transactions, tenor, size, industry sectors, and exposure to MIGA’s Exclusion List. As of December 2024, SCB Zambia’s portfolio included the following business segments – public sector finance (mainly short-term, 73.9%), corporate finance (12.6%), consumer loans (10.7%), mortgages (2.1%), and SMEs (0.7%). The main sectors supported include electrical equipment, appliances and components, wholesale and retail trade, animal production and machinery and other industrial. SCB Zambia has no exposure to activities on the MIGA Exclusion List or oil and gas activities. The Bank has some exposure to extractive industries (mainly copper mining).
MIGA assessed SCB Zambia’s E&S policies and procedures in line with the requirements of MIGA 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 Performance Standard 2: Labor and Working Conditions (PS2).
In relation to E&S risk management, SCB Zambia implements SCB Group E&S policies and procedures. SCB Group has been an Equators Principles financial intermediary since 2003. SCB Group has an Environmental and Social Risk Management Framework. The framework includes a procedure for identifying, assessing and managing E&S risks associated with clients and transactions SCB’s framework also includes the application of the Performance Standards for Equator Principles transactions, as well as establishing E&S action plans for the identified gaps. The framework includes position statements on cross-sector issues (climate change, human rights and nature) and sensitive sectors (agribusiness, chemicals and manufacturing, extractive industries, infrastructure and transport, power generation, and thermal coal), that clients and transactions are assessed against. SCB Group has a Prohibited Activities List (October 2024), which is not fully aligned with the activities on MIGA’s Exclusion List. SCB Zambia has designated E&S representatives from its relationship management and credit teams to oversee the implementation and monitoring of the SCB Group’s framework. Zambia E&S representatives receive appropriate training and support from the SCB Group’s E&S team as needed. For the MIGA Project, SCB Zambia will be required to include MIGA’s Exclusion List within its E&S procedures.
MIGA reviewed the SBC Zambia’s emergency response procedures and found them to be in line with the requirements of MIGA PS1. In relation to PS2, MIGA’s assessment revealed that SCB Zambia’s labor policies and procedures are in line with the requirements of PS2 and national labor laws in Zambia. SCB Group policies and procedures cover amongst other aspects, terms of employment, performance management, benefits and renumeration, workers’ representations, occupational health and safety, wellbeing, harassment, non-discrimination and grievance mechanism.
For the proposed guarantee, SCB Zambia 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 key expected development impacts of the Project are: (i) increased lending to the private sector across various segments in Ghana, Pakistan, and Zambia including trade finance loans supporting export promotion and foreign exchange receipts, at a time when these economies face macroeconomic challenges and crowding-out conditions for the private sector; (ii) support for SMEs in Pakistan, which face significant barriers for access to credit; (iii) replication potential by international banks in Pakistan, given that this will be the first capital optimization project in the country; and (iv) support for banking sector resilience in Ghana and Zambia, which are both emerging from macroeconomic crises and undergoing sovereign debt restructuring.