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Additional Information about the Financial Intermediary Data

The data referenced in this collaboration was collected using Thomson EIKON and IJ Global financial databases and identifies companies that received loans, corporate bond underwriting services, and/or equity from IFC and FMO’s financial intermediaries and / or their parent investors. These financial databases do not always consistently record the bank subsidiary involved in a transaction, often simply recording the name of the banking group. For example, QNB Turkey may be recorded as QNB Bank. There are instances where a subsidiary of a banking group has a distinct name, and is recorded distinctly by the financial databases.

The data contains only financial intermediaries that received financing from IFC and FMO that are likely to provide services to corporate clients. All microfinance institutions, and institutions serving only individuals and not corporations, were excluded from this data.

During the research, information was collected of subprojects financed directly by the financial intermediary, who in turn were directly receiving funds from IFC or FMO. In many cases however, the financial intermediary was a subsidiary of a larger financial institution (parent investor). The parent investor is the financial institution that owns the financial intermediary that received IFC or FMO financing. The parent investor did not receive financing from IFC or FMO, but instead owns the financial intermediary – in this case IFC and/or FMO may not have any exposure to such subprojects and therefore, IFC and/or FMO do not hold responsibility for such investments. The relationships between parent investor and financial intermediary are made clear within the Early Warning System database and dataset.  Any mistakes or errors reported within the data points on financial relationships would be derived from the original sources (i.e. Thomson and IJ Global financial database).

The information housed in the Early Warning System includes information on identified ring fences associated with the IFC or FMO investment. However, without having access to contract agreements between the development bank and the financial intermediary, it is difficult to ascertain if such ring fence requirements are contractual obligations or not. The database does not explicitly or implicitly imply that IFC or FMO have material exposure to or are contractually or legally accountable to the sub-projects financed by their financial intermediaries.

It should be noted, that since the research was based on a screening of syndicated finance and project finance, a large an important part of the total picture is still missing. Only financial institutions which take part in syndicated financing or provide project financing are covered by the research. Many more, particularly smaller more domestically oriented financial institutions in emerging economies, do not take part in syndicated financing or provide significant volumes of project financing.  However, they are active in support high-risk companies and sectors through their bilateral corporate financing portfolios. 

Guidance on using the data to identify IFC or FMO’s responsibility for financial intermediary sub-projects or sub-clients

IFC and/or FMO’s material exposure to the portfolio of their financial intermediaries depends on the following variables:

  • Timeframe of the investment: Whether the closing/issue dates of the loan, underwriting and/or project finance provided by the financial intermediary is after IFC or FMO’s date of approval of the investment in that particular financial intermediary.
  • Whether IFC or FMO’s investment in the financial intermediary is targeted (ring fenced) to a particular asset class or sector.
  • In case of a ring fenced IFC or FMO FI investment, only loans, underwritings and/or project finance provided by the financial intermediaries within that particular asset class or sector would have potential material exposure to IFC or FMO.
  • If IFC or FMO’s FI investment in the financial intermediary is an equity investment, then all loans, underwritings and/or project finance provided by the financial intermediaries would have potential material exposure to IFC or FMO.
  • If IFC or FMO’s FI investment is for general purpose or it appears to have no apparently ring fence to a particular asset class or sector, then it is most likely that all loans, underwritings and/or project finance provided by the financial intermediaries would have potential material exposure to IFC or FMO.

Beyond this technical reason to include the financing by the parent financial institution in the research, there is also the financial institution policy logic. The Environmental, Social and Governance (ESG) risk mitigation policy of the parent financial institution should apply to the subsidiary.

View the data visualization, FMO & IFC’s High Risk Financial Intermediary Investments : bit.ly/Oxfam_EWS_Tableau

Read  an article explaining the purpose of this initiative: bit.ly/oxfam_ews 

For a glossary of terms: bit.ly/EWS_Glossary