Bank Directive. Management Framework for Financial Intermediary Funds. Bank Access to Information Policy Designation Public

Transcription

1 Bank Directive Management Framework for Financial Intermediary Funds Bank Access to Information Policy Designation Public Catalogue Number DFi2.02-DIR.01 Issued and effective February 9, 2015 Content Directions for Bank engagement as trustee in Financial Intermediary Funds Applicable to IBRD and IDA Issuer Vice President, Development Finance Sponsor Director, Development Finance Trust Funds and Partnerships

2 SECTION I PURPOSE AND APPLICATION 1. This Directive sets out rules applying to the Bank, as trustee, in its engagement with Financial Intermediary Funds (FIFs) 1. It also clarifies the role of the Bank as Trustee in accreditation or eligibility frameworks for new Transferees of FIF funds. 2. This Directive applies to the Bank. SECTION II DEFINITIONS The capitalized terms or acronyms used in this Directive have the meanings set forth below: 1. Bank: IBRD or IDA. 2. Board: the Executive Directors of IBRD or IDA, or both, as applicable. 3. Board Committee: any of the committees of the Board. 4. BP: a bank procedure statement setting forth the mandatory set of procedures to be observed in implementing a policy requirement. 5. Concept Note: a brief document setting out, among other things, the objectives and structure of a new project, as well as the resources and decisions needed to move forward in the implementation of the project. 6. DFi: the Development Finance Vice-Presidency of the Bank. 7. Financial Intermediary Fund and FIF: a trust fund that involve financial engineering or complex finance schemes, or where the Bank provides a specified set of administrative, financial, or operational services as defined in paragraph 4(iii) of OP Framework: the Board Report entitled Management Framework for World Bank Partnership Programs and Financial Intermediary Funds: Strategic Engagement, Oversight and Management (SecM and IDA/SecM ) dated June 14, IBRD: International Bank for Reconstruction and Development. 10. IDA: International Development Association. 11. Implementing Entity: a Transferee approved by the relevant decision-making body for the FIF and which assumes fiduciary responsibilities over activities financed by the FIF. 1 This Directive applies regardless of the size of the FIF and only for FIFs at the trustee level. Catalogue Number DFi2.02-DIR.01 Page 1 of 6

3 12. OP: an operational policy statement setting forth mandatory policy requirements for the conduct of Bank s operations. 13. Partnership Program and PP: a partnership having the following characteristics: (a) a partnership body that facilitates agreement among the partners; (b) a multi-country scope; and (c) dedicated funding for implementation of a program of activities over time. 14. Program Document: a document which describes the agreed program design, the proposed activities, roles and responsibilities of the Bank vis-à-vis the other partners, and the proposed funding mechanism. 15. TFP: Trust Fund Proposal. 16. Transferee: a direct recipient of funds from the FIF (excluding vendors) who may also be an Implementing Entity which assumes fiduciary responsibilities over activities financed by the FIF. 17. Trustee: the roles and responsibilities accepted by the Bank with respect to FIFs to provide an agreed set of financial intermediary services, which include receiving, holding and transferring funds to Transferees. 18. VPU: a Vice Presidential Unit of the Bank. SECTION III SCOPE 1. Engagement in a New FIF The Bank decides whether to accept the Trustee role or responsibilities proposed based on the criteria outlined in paragraph 3 of OP and additionally: a. The Bank ensures that the nature and scope of the Bank s engagement in the FIF draws on Bank expertise that is not readily available elsewhere, enabling the Bank to add value. b. As part of ongoing risk management and controls 2, the Bank s continuing engagement as Trustee for a FIF is reviewed, following a risk-based approach, throughout the lifecycle of the FIF, including on a periodic basis and when considering a possible exit from the FIF. Such risk-based review involves a qualitative assessment of risks based on size, structure of the program (i.e. roles and responsibilities assigned to the Trustee compared to its decision-making authority in the program), innovative characteristics, as well as associated institutional risks. 2. Design Principles and Process for Trustee Engagement in FIFs 2 See OP 14.40, paragraph 3(c). Catalogue Number DFi2.02-DIR.01 Page 2 of 6

4 a. General Design Principles i. A new FIF is established in accordance with the requirements and steps set out in OP and BP and as supplemented below. ii. The Bank, as Trustee, can transfer FIF funds to Transferees without the Bank playing an operational role in the activities financed by such FIFs. Upon the transfer of FIF funds to a Transferee, the Bank, as Trustee, has no responsibility for the use of the funds transferred and activities carried out with those funds. Consistent with the terms of the legal agreements with donors, 3 the transfers are made at the instruction of the relevant decision-making body which is responsible for the choice of Transferee. iii. The Bank, as Trustee, transfers FIF resources at the instruction of the relevant decision-making body, either in accordance with: (A) legal agreements 4 entered into between the Bank as Trustee and Transferees; or (B) terms agreed between the Bank as Trustee and the PP where such PP is a legal entity. iv. The Bank, as Trustee, does not transfer FIF funds to a Transferee if such transfer is prohibited by a decision of the United Nations Security Council under Chapter VII of the Charter of the United Nations. 5 If an Implementing Entity is debarred after the commitment of funds under a FIF, the Bank as Trustee will not renew an agreement with such Implementing Entity. b. Concept Review i. Before the TFP is prepared, the Concept Note lays out the overall rationale and objectives of the proposal to establish a new FIF. The Concept Note describes how the Bank will manage its roles to mitigate any potential conflict of interest. The Concept Note also contains a summary risk assessment and proposed risk management plan for the proposed FIF which is updated from time to time. Finally, the Concept Note seeks Management s guidance and approval to proceed with next steps in preparation of the FIF. Consistent with BP paragraph 4, review by Senior Management is required for the Concept Note for a new FIF or changes to an existing FIF where any one of the following apply: A. involves the commitment of significant Bank resources; B. involves a secretariat in the Bank; C. involves financial intermediation or unusual financial services, on behalf of partner entities, or will materially impact the IBRD or IDA balance sheets; 3 See BP 14.40, paragraph 6(a). 4 See BP 14.40, paragraph 6(c). 5 See Agreement between the United Nations and the International Bank for Reconstruction and Development, Article VI(1). Catalogue Number DFi2.02-DIR.01 Page 3 of 6

5 D. envisages the transfer of FIF funds to Implementing Entities which will play such a role for the first time; E. has significant external visibility (e.g. a fund critical to support for a particular global challenge, or delivering a global or regional public good, etc.); or F. raises significant financial, operational, or other risks. ii. Supplementing footnote 7 (iii) of BP 14.40, new FIFs or changes to existing FIFs require approval by the Board or a Board Committee if it involves a deviation from Bank policies. iii. If no Board review is required, the Board is informed of Management s decisions regarding the FIF proposal through regular reporting at least biannually. c. Program Document Review After an approved Concept Note and discussion with donors and external partners, and before the TFP is approved, consistent with BP 14.40, a Program Document package is prepared. The Program Document package describes the agreed program design, the proposed activities, roles and responsibilities of the Bank vis-à-vis the other partners, and the proposed funding mechanism. 3. Communication Each FIF, for which the Bank provides the secretariat or core management functions, has a communications strategy and action plan that lays out the activities, responsibilities and resources needed for communications throughout the lifecycle of the Bank s engagement. The scope of the communications strategy and action plan varies based on the degree of Bank involvement. 4. Accreditation or Eligibility of Transferees Receiving FIF Funds from the Bank as Trustee The relevant decision-making body develops, as necessary, an accreditation or eligibility framework with respect to Transferees. The VPU responsible for the Bank s trustee services determines whether the accreditation framework proposed presents an acceptable level of risk to the Bank in its trustee role. The relevant decision-making body is responsible for assessing new Transferees against the relevant framework. 5. Exit from Financial Intermediary Funds The Bank has the right to unilaterally terminate its role as trustee for the FIF. SECTION IV WAIVER A waiver of a provision of this Directive may be granted: Catalogue Number DFi2.02-DIR.01 Page 4 of 6

6 a. By the Board, if the waiver seeks a deviation from a provision of this Directive which is derived from OP or otherwise falls within the Board s jurisdictional purview; or b. by the Vice President, DFi, in the case of waivers of other provisions of this Directive. Section V TEMPORARY PROVISIONS A communications strategy and action plan and a risk assessment for each existing FIF will be developed, in coordination with the Trustee and Bank units performing other roles with respect to the FIF, and put in place by July 31, SECTION VI EFFECTIVE DATE This Directive is effective February 9, SECTION VII ISSUER The Issuer of this Directive is the Vice President, Development Finance. SECTION VIII SPONSOR The Sponsor of this Directive is the Director, Development Finance Trust Funds and Partnerships. SECTION IX RELATED DOCUMENTS 1. Operational Policy Trust Funds 2. Bank Procedure Trust Funds 3. Management Framework for World Bank Partnership Programs and Financial Intermediary Funds: Strategic Engagement, Oversight and Management, SecM and IDA/SecM June 14, Bank Procedure, Management Framework for Financial Intermediary Funds, February 9, 2015, Catalogue Number DFi2.02-PROC Bank Guidance, Initiation of Financial Intermediary Funds, February 9, 2015, Catalogue Number DFi2.02-GUID Bank Guidance, Accreditation Framework for Implementing Entities under Financial Intermediary Funds, February 9, 2015, Catalogue Number DFi2.02-GUID Bank Guidance, Communications for Financial Intermediary Funds, February 9, 2015, Catalogue Number DFi2.02-GUID.05 Catalogue Number DFi2.02-DIR.01 Page 5 of 6

7 8. Bank Guidance, Terms of Reference for Bank Staff representing the Trustee in Financial Intermediary Fund Governing Bodies, February 9, 2015, Catalogue Number DFi2.02- GUID.02 Questions regarding this Directive should be addressed to the Sponsor. Catalogue Number DFi2.02-DIR.01 Page 6 of 6