24044
April 8, 2002
Integrated Safeguards Data Sheet
Section I - Basic Information
Date ISDS Prepared/Udated: April 8, 2002
A. BRasic Project Data (from PDS)
COUNTRY: Brazil                              PROJECT ID: PE-P066259-LEN-BB
PROJECT: Second Programmatic Financial       TTL: Anjali Kumar
Sector Adjustment Loan
APPRAISAL DATE: February 26th                IBRD AMOUNT ($m): 400 Million
BOARD DATE: June 13,2002                     IDA AMOUNT ($m): None
MANAGING UNIT: LCSFF                          SECTOR: Finance
LENDING INSTRUMENTS: Programmatic             STATUS: Lending
Loan                _
Project Objectives (From PDS)
The objective of the proposed operation is to lend continued support to the broad-based and
comprehensive financial sector reform program pursued by the authorities and supported by the
Bank through a first programmatic loan in 2001, and further extended in scope and depth in the last
year. Through its support for a strengthened financial system, the loan would help to anchor poverty
reduction in Brazil with sustained and crisis-free growth, thus aiding long term poverty alleviation.
Project Description (From PDS)
The proposed second financial sector adjustmenf loan supports sustained progress in all reform
areas covered in the first programmatic operation, and gives recognition to acceleration in
implementation of difficult financial sector reforms, beyond the scope of the first programmatic
adjustment operation. Areas covered in the first operation and extended to the present operation
include: broad progress with regard to achievement of indicative actions envisaged in the first
operation, encompassing the raising of depth and efficiency of financial intermediation, banking
system soundness, securities markets governance and regulation, and protection against payments
system risk. A second area, introduced in the present operation, is public bank reform, and third
acceleration of progress in major legal reforms pertaining to the financial sector.
Project Location: (Geographic location, information about the key environmental and social characteristics of the
area and population likely to be affected, and proximity to any protected areas, or sites or critical natural habitats, or
any other culturally or socially sensitive areas.)
No specific project site. Encompasses Central Bank and Financial Institutions In various cities in Brazil.
B. Check Environmental Classification A [ B [}, C [X ], FI[ , TBD []
Comments:
C. Applicability of Safeguard Policies (from PDS)
Click on Policy name for brief summary of objectives, triggers and requirements
Click on Policy refcrence number for full policy
Yes    No      TBD
Environmental Assessment (OPtBP/GP 4.01)                   [ ]     [x]    I I
Forestry (OP/GP 4.36).                                     [ ]     [XI    I 
Natural Habitats (OP/BP 4.04)                              [ I     [xI   [I 
Safety of Dams (OP/BP 4.37)                                [   1   [xI    I I
Pest Management (OP 4.09)                                   I ]    [xI    [ I
Involuntary Resettlement (OD 4.30)                         I1     [XI      1I
Indigenous Peoples (OD 4.20)            _                                    _j [xi  I i
Cultural Property (OPN 11.03)                              [ I     [x]   [I 
Ptojects in Disputed Areas (OP/BP/GP 7.60)                 1 1     [x]   [I 
PIrojects on International Waterways (OPtBPtGP 7.50)       1 1     [xI    I I
By supporting the proposedproject, the Bank does not intend to prejudice thefinal determination of the
parties' claims on the disputed areas



Section II - Key Safeguard Issues and Their Management
D. Summary of Key Safeguard Issues. Please fill in all relevant questions. If information is not available, describe
steps to be taken to obtain necessary data.
1. Describe any safeguard issues and impacts associated with the proposed project
Although there are no obvious safeguard issues, a study was comunissioned which included: (i) a broad investigation
of present environmental policies and standards applicable towards both federal and private bank lending;
(ii) issues concerning the application of such standards, at both federal and private banks; and how these
are taken into consideration for credit decisions; (iii) the possibility of the existence of environmental
liabilities in the portfolio of federal banks, which may require restructuring, and measures taken to deal
with such liabilities. A detailed report has been produced and is annexed to this document (Portugese
original plus English Translation).
2. Identify and describe any potential large scale, significant and/or irreversible impacts. Describe any
potential cumulative or long term impacts.
None
3. In light of I and 2, describe the proposed treatment of alternatives (if required)
None
4. Describe arrangement for the borrower to address safeguard issues
None
5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard
policies, with an emphasis on potentially affected people.
Based on the report, the team concludes that at present the continued debate of enviromnental issues and
the finacial sector could be a part of a forward looking Bank program. Second, the unfinished goal of the
formal extension of the Protocol Verde to private banks and evaluations and reforms of the current
environmental licensing system could also be evaluated at a future stage, once the MMA concludes its
disgnostic. Third, an exploration of the regulation of salelable environmental securities and insurance
against environmental risks is recommended. Finally, continued emphasis on training and development of
adequate human resources, within financial institutions as well as in partner implementing agencies, is
advisable.
As follow up to its report, the Bank team has forwarded the consultant study to the banking system through
the offices of FEBRABAN, the bankers association, and also to the Central Bank. Both are prepared to
engage in follow up seminars as recommended. FEBRABAN has already begun to actively engage in
initiatives conceming sustainable banking. In March 2002, Febraban organized a debate on environmental
risks and opportunities for banks (Riscos e oportunidades ambientais para bancos), which was held in Sao
Paulo on March 6. The keynote speaker was from IFC. Over 70 persons from different.banks attended the
event. In March, besides this event, there was another organized by ABN Amro bank and one by the UNEP
in Rio de Janeiro, where attendance from Brazilian banks was high.
E. Safeguards Classiflcation (select one). Category is determined by the highest impact in any policy. Or on basis
of cumulative impacts from multiple safeguards. Whenever an individual safeguard policy is triggered the provisions of
that policy apply.
[ ] S1. - Significant, cumulative and/or irreversible impacts; or significant technical and institutional risks in
management of one or more safeguard areas
[ I S2. - One or more safeguard policies are triggered, but effects are limited in their impact and are
technically and institutionally manageable
[X I S3. - No safeguard issues



[]SF - Financial intermediary projects, social development funds, community driven development or
similar projects which require a safeguard framework or programmatic approach to address safeguard
issues.
F. Disclosure Requirements
Environmental Assessment/Analysis/Management Plan: Not applicable
Date of receipt by the Bank                   ... /...       or N/A
Date of "in-country" disclosure               ./.. .1...     or N/A
Date of submission to InfoShop                .. .1.. ...    or N/A
For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors
... 1... /...  or N/A
Resettlement Action Plan/Framework: Not applicable
Date of receipt by the Bank                  .../ .../...    or N/A
Date of "in-country" disclosure               . . ..../. ..  or N/A
Date of submission to InfoShop                . . ./.../...  or N/A
Indigenous Peoples Development Plan/Framework: Not applicable
Date of receipt by the Bank                   .. ./...       or N/A
Date of "in-country" disclosure              ...1. /...      or N/A
Date of submission to LnfoShop                . . ./.../..   or N/A
Pest Management Plan: Not applicable
Date of receipt by the Bank                   . ./. ../...   or N/A
Date of "in-country" disclosure               . . .1. /...   or N/A
Date of submission to InfoShop               .. ./. ./..     or N/A
Dam Safety Management Plan: Not applicable
Date of receipt by the Bank                  .. ./. . ./...  or N/A
Date of "in-country" disclosure              ... 1...        orN/A
Date of submission to InfoShop                . . ./. ./...  or N/A
If in-country disclosure of any of the above documents is not expected, please explain why.
Not applicable                                                    F
Signed and submitted by:                °A,
Task Team Leader:                             Name Anjali Kumar     Date: April 8,2002
Project Safeguards Specialist 1: Not applicable  Name               Date:
Project Safeguards Specialist 2: Not applicable  Name               Date:
Project Safeguards Specialist 3: Not applicable  Name               Date:
Approved by:                                       AT                         I
Regional Safeguards Coordinator   Juan D. Quintero-'1,       Date  A      -17/o  _
Sector Manager                   Fernando Montes-Negret      Date
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