Washington DC, December 17, 2001—
The Board of Directors of the World Bank approved separate credit lines totaling US$250 million for two of the largest private banks in Brazil, Banco Itau and Unibanco, sending a signal of confidence in the Brazilian banking system.
The International Finance Corporation (IFC), the private sector arm of the World Bank Group, will lend up to $150 million for its own account to Unibanco, the fourth largest private sector bank in Brazil in terms of assets, and $100 million to Banco Itau, Brazil’s second largest private sector bank in terms of assets. The credit lines will be used by these banks to finance infrastructure, energy, industrial expansion and environment related projects.
These loans highlight IFC’s commitment to respond rapidly to recent changes in global and domestic conditions, particularly after the events of September 11, in this case by making long-term finance available to the Brazilian private sector. The loans also shed a positive light on the growing project finance activities of two leading Brazilian banks.
Bernard Pasquier, IFC Director for Latin America and the Caribbean noted: “These investments show that we have confidence in the resilience of the Brazilian banking system. They confirm that IFC can work effectively and quickly with the Brazilian private sector to help address various economic bottlenecks that have recently arisen, such as debilitating power shortages induced by Brazil’s current energy crisis.” Additionally, Mr. Pasquier pointed out that the loans are part of IFC’s strategy to invest in Brazil’s financial sector and physical infrastructure in order to improve prospects for the country’s sustained growth, an essential precondition for poverty reduction.
In addition to the credit lines, IFC may arrange a syndicated loan of up to $150 million for Unibanco, and a syndicated loan of up to $100 million for Banco Itau, for similar on-lending purposes. These loans would bring the combined volume of the two operations up to $500 million.
In IFC’s view, Brazil is well equipped to withstand external shocks. Over the last few years, the Brazilian government has demonstrated an enhanced capacity to manage risks, pursue structural reforms and stay the course on fiscal adjustment. These achievements have been complemented by restructuring of the banking system as well as improved bank supervision and regulation. As a result, the investment climate in the country has been improving consistently.
IFC’s mission (
www.ifc.org
) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. Since its founding in 1956, IFC has committed more than $31 billion of its own funds and arranged $20 billion in syndications for 2,636 companies in 140 developing countries. IFC’s committed portfolio at the end of FY01 was $14.3 billion.
