Guatemala, April 30, 2003—
The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has signed an agreement to provide $10 million to Banco de Occidente, one of the leading commercial banks in Guatemala.
The IFC financing, the first in a locally-owned bank in Guatemala, will help strengthen the Bank’s capital base and will support the expansion and consolidation of its operations in the financial market. The transaction consists of a subordinated, income participation loan that will count as Tier-2 capital.
Karl Voltaire, IFC's Director for Global Financial Markets, said: "IFC's loan to Banco de Occidente reflects our continued commitment to the Guatemalan financial sector at a time when restructuring efforts have gained considerable momentum in the country”.
“The agreement signed between Banco de Occidente and IFC is a very positive event for the Guatemalan banking sector. We are pleased to build on our strong relationship with IFC and to the boost in our capital base," said Mr. Pedro Aguirre, the Chairman of Banco de Occidente. "In a difficult economic environment, Banco de Occidente was able to effectively navigate the contractions in the Guatemalan banking sector, while maintaining its indisputable financial strength," he noted.
Manuel Nuñez, IFC’s Regional Manager for Central America and the Caribbean added: “Strengthening the financial sector in Central America is a key IFC priority. Our collaboration with Occidente shows a clear commitment to pursue this objective and will establish a foundation for further financial markets development work in the region.”
Occidente is the oldest bank in Central America. It was established in 1881, originally as a retail bank focusing on the western region of Guatemala, where it still claims 80% of the deposits. Today, Occidente is regarded as the premier bank servicing the corporate market. As of December 31, 2002, Occidente ranked sixth in terms of total assets and sixth in share of deposits of the Guatemalan private banking system ($7.9 billion and US$5.7 billion respectively), with a total of $489 million (6.14% of total) and $279 million (4.9% of total), respectively.
IFC’s strategy in Central America focuses on encouraging economic growth, in particular via the development of regional financial and physical infrastructure, and supporting competitive manufacturing and services companies. IFC’s investment in Occidente is consistent with this strategy as it would help promote regional financial integration and increase the depth and soundness of financial systems in the region.
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 $34 billion of its own funds and arranged $21 billion in syndications for 2,825 companies in 140 developing countries. IFC’s committed portfolio at the end of FY02 was $15.1 billion.
