IFC extends $30-M loan

In a move designed to spur the development of the banking sector in Guatemala, the International Finance Corp. (IFC) has signed an agreement to provide Banco Industrial, S.A., the country’s largest financial institution, with a $30 million subordinated loan.

IFC’s financing will help support Banco Industrial’s plans to expand its financing of large firms, the growing export sector, and small and medium enterprises. It will also help deepen the bank’s successful program for processing remittances from Guatemalans abroad. The loan will qualify as tier-II capital for regulatory purposes.

"By strengthening the capital base of the leading bank in Guatemala, IFC will promote the consolidation of the country’s financial sector, which will further increase the stability of the banking system," Jyrki Koskelo, IFC’s director for Global Financial Markets, said.

IFC, the private sector investment arm of the World Bank Group, seeks to support Central American countries as they work to increase their competitiveness in the face of accelerating globalization. Its financing is particularly timely as the Central America Free Trade Agreement (CAFTA) creates new opportunities and challenges for the private sector and the governments of the region.

In the financial sector, IFC has been providing leading banks in Central America with investments tailored to strengthen their capital bases so that they can take advantage of regional expansion opportunities.

It added that the investment will constitute a signal of approval in the international market and help put Banco Industrial on a very competitive footing as CAFTA is implemented in the region.

Banco Industrial, founded in 1968, has consolidated assets of $3 billion and more than a 20 percent market share of assets and deposits.

Well established in the large corporate market segment, it supports a client base, including key exporters, of good credit quality with trade finance, working capital, and financing for capital expansion. In recent years, it has increased its services for small and medium companies and individual customers. It is the largest processor of family remittances from Guatemalans abroad.

Banco Industrial chief executive officer Diego Pulido welcomed the new relationship with IFC as its long-term financing will help diversify the funding sources necessary to sustain growth.