IFC Capitalization Fund Invests $100M in Banco G&T Continental to Support SME’s in Central America
(IFC) December 13, 2012—IFC Capitalization Fund, a fund managed by IFC Asset Management Company, signed an investment in Guatemala-based Banco G&T Continental, a key player in Guatemala’s financial sector with operations in El Salvador, Costa Rica and Panama. The investment will help expand the bank’s services to small and medium enterprises (SMEs) in Central America, increasing opportunities for businesses to grow and create jobs.
The $100 million subordinated loan will provide Banco G&T Continental with Tier II capital under local regulatory requirements. Banco G&T expects to be able to leverage the loan to provide at least $1 billion in new financing to help Central American businesses thrive.
Flavio Montenegro, CEO of Banco G&T Continental, said, “For G&T Continental this is an operation that strengthens our long term funding and our capital position which will support Guatemala’s economy increasing the funding available for the industries of our country”.
Since 2008, IFC has engaged with Grupo Financiero G&T Continental in three investments, including equity participations in the bank and its insurance company, Seguros G&T, and is planning one advisory project.
“This investment reaffirms our commitment to supporting the Central American banking sector through our long-standing partnership with Banco G&T Continental (member of Grupo Financiero G&T Continental)” according to Giri Jadeja, IFC’s Senior Manager for Financial Markets in Latin America and the Caribbean, who signed the transaction on behalf of IFC Capitalization Fund on December 13, 2012. “The investment by the IFC Capitalization (Subordinated Debt) Fund will strengthen the bank’s capital, allowing it to expand into markets like the under-served micro, small, and medium-enterprise sector.”
The investment is aligned with the World Bank and IFC’s financial-sector strategy in Central America, which aims to support regional financial groups in building a stronger financial sector. IFC Capitalization Fund is a global equity and subordinated debt fund founded by IFC and the Japan Bank for International Cooperation (JBIC). It invests in banks considered vital to the financial system of emerging-market countries.
“Banco G&T Continental is a leading Central American bank with solid fundamentals and an outstanding track record. We are looking forward to supporting their operations with an innovative product that will help position the bank for future growth,” said Marcos Brujis, Head of the IFC Capitalization Fund.
Between Fiscal Year 2010 and 2012, IFC invested $2 billion in Central America, including $1.4 billion from its own account and $580 million in mobilization. In 2011 alone, IFC helped support over 25,000 SME loans for a value of $1.3 billion, while creating over 38,000 jobs in the region and reaching more than 14,000 patients.
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments. In FY12, our investments reached an all-time high of more than $20 billion, leveraging the power of the private sector to create jobs, spark innovation, and tackle the world’s most pressing development challenges. www.ifc.org.
About IFC Asset Management Company
IFC Asset Management Company LLC, a wholly-owned subsidiary of IFC, invests third-party capital, enabling outside investors to benefit from IFC’s expertise in achieving strong equity returns, as well as positive development impact in the countries in which it invests. It has $4.5 billion of assets under management including the $3 billion IFC Capitalization Fund, the $1 billion IFC African, Latin American, and Caribbean Fund; and the $182 million Africa Capitalization Fund.
About Banco G&T Continental
Banco G&T Continental is a full range commercial bank and the country’s third largest banking institution with total assets of $4.78 billion as of October 31, 2012. Through its network of 324 branches and mini-banks, 2,853 banking agents and 2,655 ATMs in Guatemala. The client serves four market segments corporate banking for medium-sized and large companies, banking for small businesses, retail banking with individuals, and institutional banking.
Corporate banking is clearly the largest of the four segments. Although the client has a strong focus on commercial banking, Banco G&TC is also a major player in the remittance business with a 20.2% and 7.2% market share in total remittances and family remittances, respectively. Its 16 branches in Los Angeles, New Jersey and New York, USA, are a crucial tool to capture these remittances from the strong Guatemalan diaspora in USA.
Japan Bank for International Cooperation (JBIC) is a policy-based financial institution wholly owned by the Japanese government. JBIC contributes to the development of Japan and the international economy by promoting overseas development and securing resources which are important to maintaining and improving the international competitiveness of Japanese industries and overseas businesses. It strives to preserve the global environment, while supplementing financial transactions implemented by financial institutions. JBIC also provides the financial services necessary to prevent disruptions to international financial order, and takes appropriate measures with respect to damages caused by such disruptions. www.jbic.go.jp/en.