Washington, D.C., June 27, 2003—
The International Finance Corporation, the private sector arm of the World Bank Group, and Banco de Oro have established the $62.5 million Risk Sharing Facility to expand financing and medium to larger companies. The facility aims to provide loans with longer terms than those traditionally available from Philippine commercial banks, opening new opportunities for companies to expand production and improve the efficiency of their businesses.
Under the terms of the facility, Banco de Oro will provide loans to clients directly over the next three years. IFC will guarantee 32 percent of each new loan originated by Banco de Oro, up to a maximum total exposure of $20 million.
“This transaction provides IFC with an excellent opportunity to work with a leading Philippine banking group, and an existing client, to address a major problem facing businesses in the country: access to medium- to long-term financing,” said Karl Voltaire, IFC director of global financial markets. Javed Hamid, director of East Asia and the Pacific, added, “IFC is committed to helping companies in Asia find new financing solutions so that they can more effectively compete, expand, and contribute to economic growth.”
“We are glad to be working with IFC to launch this facility to enable the bank to increase the size and the maturity of our debt financing to borrowers,” said Nestor Tan, President of Banco de Oro. He added, “The facility will help our borrowers gain access to medium and long-term financing, and therefore improve and expand their operations.”
Banco de Oro is the fifth largest domestic private bank in the Philippines. BDO’s largest shareholder is the SM Group of companies, one of the leading diversified business groups in the Philippines. BDO made an initial public offering of shares in May 2002 and is today owned institutional shareholders as well as public shareholders. Banco de Oro was cited by
Asiamoney
magazine, an affiliate of
Euromoney
, as the
Best Newly Listed Company
in the Philippines for 2002, and among the top three best managed small companies in Asia (with market capitalization of below $500M). In 2002, IFC completed with Banco de Oro a Tier II investment of $20 million, which has a convertible feature. IFC is an observer on Banco de Oro’s board and is providing the bank with technical assistance to strengthen key areas of the institution.
IFC has been active in the Philippines for over 25 years, with commitments of $1.1 billion for its own account and nearly $700 million in loan syndications. IFC has financed 70 projects in sectors as diverse as energy, infrastructure, financial markets, agribusiness, health care, manufacturing and tourism.
The mission of IFC 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, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY02, 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 worldwide committed portfolio as of FY02 was $15.1 billion for its own account and $6.5 billion held for participants in loan syndications.
