Washington D.C. November 27, 2001
—The International Finance Corporation, the private sector arm of the World Bank, will invest US$18 million in Banco Montevideo, a leading Uruguayan bank with long experience in retail banking. The investment – $9 million in equity and $9 million in the form of a subordinated convertible loan – will help fund the bank’s expansion strategy through the acquisition of Banco Caja Obrera, a public institution currently being privatized by the Central Bank.
In addition to IFC’s $9 million equity investment, Banco Montevideo's current share-holders have made a capital injection of $5 million to complete the necessary funding for the acquisition of Banco Caja Obrera.
The IFC investment in Banco Montevideo’s planned expansion will support an important private bank in a market still crowded out by the public sector. Banco Montevideo’s expansion will also improve service to the retail market.
The investment fits in with IFC’s global policy of strengthening financial institutions in developing countries and emerging markets in order to create diversified sources of credit for the private sector. A vibrant and strong private sector is a key element to economic growth and sustainable job creation.
“This investment will help strengthen Uruguay’s private banking sector, which is critical to the further strengthening of the country’s private sector,” said Bernard Pasquier, IFC’s Director of Latin America and the Caribbean region. “We are also pleased to be involved in a project that supports the government of Uruguay’s bank privatization efforts,” he said.
“This investment will help us to be an active participant in the consolidation of the Uruguayan financial system and become one of the country’s leading banks once the consolidation process is completed. Our project will help a higher percentage of the Uruguayan population to benefit from banking services,” said Marcelo Guadalupe, General Manager of Banco Montevideo.
Banco Montevideo S.A is part of the Velox Organization (the Velox group), a diversified commercial and financial services group that owns banks in Argentina, Paraguay, and Uruguay, as well as finance and exchange houses in all MERCOSUR (Southern Cone Common Market) countries. The bank is headquartered in Montevideo, Uruguay and will have 38 branches across the country following the acquisition.
“This investment will give Uruguayan lower-middle and middle class segments of the population greater access to bank credit,” Pasquier said. “It might also pave the way for future foreign direct investment in Uruguay’s banking sector.”
IFC’s mission 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.
