WASHINGTON, D.C., Jan. 13—The International Finance Corporation (IFC) has approved a US$110 million financing facility for Banco Bilbao Vizcaya-México (BBV-México), the country’s seventh-largest commercial bank. The financing package consists of a US$80 million Restructuring Credit Line (RCL) and a US$30 million Subordinated Exchangeable Loan (SEL).
The RCL will enable BBV-México to provide financial and operational restructuring assistance to medium-sized Mexican enterprises that face heavy debt burdens resulting from the devaluation of the Mexican peso in December 1994 or have been unable to obtain affordable long-term financing to carry out modernization and expansion programs. Ten million dollars of the RCL are specifically allocated for enterprises located in the Mexican states of Oaxaca and Chiapas, where the shortage of long-term financing is acute. IFC staff in Mexico will work closely with BBV-México in identifying and restructuring client companies under the facility.
The SEL will serve as an injection of Tier II capital and thereby further strengthen BBV-México’s capitalization. The SEL will be exchangeable for common shares of Grupo Financiero BBV*Probursa (BBV*Probursa), the parent of BBV-México, which is listed on the Mexico City Stock Exchange.
“This project reflects two of IFC’s top priorities in Mexico--strengthening the banking system and supporting the middle-market sector,” said Mr. Helmut Paul, Director of IFC’s Latin America and the Caribbean Department. “Strengthening the capitalization of a major bank like BBV-México should have an important demonstration effect for the banking system as a whole,” he added.
BBV-México, which is 100 percent owned by BBV*Probursa, was the first bank to be sold under the privatization of the Mexican banking system. IFC and Banco Bilbao Vizcaya of Spain acquired about 12 percent of BBV*Probursa in 1991, and Banco Bilbao Vizcaya has since increased its holdings to 64 percent, with IFC continuing as a minority shareholder. IFC is represented on BBV*Probursa’s Board of Directors by Mr. Daniel F. Adams.
IFC is a member of the World Bank Group and is the leading multilateral source of equity and loan finance for private sector projects in developing countries.
