Washington, DC, June 21, 2005.-
The International Finance Corporation, the private sector arm of the World Bank Group, today signed a $98 million credit line agreement with the Brazilian bank, Banco ABN AMRO Real S.A. The new credit line complements a facility already put in place by IFC and Banco Real in September 2004, which represented IFC’s first support of on-lending to be specifically targeted to sustainability.
Like the original facility, the current transaction will encourage continued development of two business lines at the bank: long-term lending to family-owned, middle-market companies that meet specific corporate governance criteria and that commit to improve their governance practices further, as well as environment-related, long-term loans to projects and companies.
The new credit line will also support Banco Real’s growing activities in the origination, structuring, and placement of FIDC transactions. These transactions, which are comparable to asset-based securitizations, represent an important new funding source for Brazilian borrowers, and they play an increasingly important role in making incremental credit available to the country’s small and medium enterprises, as well as individuals.
Jyrki Koskelo, Director of IFC’s Global Financial Markets Department, noted, “This transaction reflects greater-than-expected demand for funding under the facility we put in place for Banco Real last year – especially for financing that promotes corporate governance at family-owned companies, which represent over 90 percent of Brazilian firms. We are pleased to work further with Banco Real on making credit resources available to this dynamic sector of the country’s economy.”
Jose Berenguer, Executive Vice President Global Markets and Company Products, observed, “Both directly and indirectly, much of the funding for IFC will help smaller companies in Brazil. The credit line will play a particularly important role at family-owned, middle-market companies. It will also enable our corporate clients to access longer-tenored working capital financing –helping them provide more favorable credit terms to their customers, both individuals and smaller enterprises.”
Atul Mehta, IFC’s Director for Latin America and the Caribbean, said, “ We are extremely pleased with the continuing cooperation with Banco Real, already a market leader in Brazil as far as sustainability-related business practices are concerned. This partnership makes additional funding available to forward-looking Brazilian companies.”
Banco Real, established in 1917, is the fifth-largest private bank in Brazil, with $22.9 billion equivalent in total assets as of December 2004. Operating through a network of over 1,890 branches and mini-branches , it has a valuable and growing franchise as well as a diverse product mix and solid presence across Brazil, all of which contribute to its sound earnings performance and a sizeable deposit base.
The mission of IFC (
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, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.
