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IFC Capitalization Fund Invests $100M in Banco G&T Continental to Support SME’s in Central America

13 December 2012

(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.

About IFC

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.

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.

About JBIC

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.