Washington, D.C., June 26, 2006
—The International Finance Corporation, the private sector arm of the World Bank Group, signed an agreement to provide approximately 115 million reais (equivalent to $50 million) in a seven-year financing to Brazil’s Banco BBM S.A. The transaction, which involves a subscription to a cross-border, real-linked bond, is IFC’s first major local currency investment project in Brazil.
Banco BBM will use funding proceeds from the transaction to expand its medium-tenor lending to midsize companies.
Saran Kebet-Koulibaly, Associate Director for Latin America and the Caribbean and head of Brazil operations, said, “In addition to being our first significant investment transaction effectively denominated in Brazilian reais, this will be the first of several IFC projects that aim to support the operations of medium-size Brazilian banks – more often than not with local currency structures like this one.”
He added, “We are very enthusiastic about this new type of business opportunity, since midsize financial institutions play an important role in promoting competition and efficiency improvements in the country's banking sector. Moreover, they often play a key role in making credit available to smaller and midsize companies, firms that sometimes cannot obtain funding from larger banks or the capital markets.”
Banco BBM is Brazil's oldest private sector bank and is regarded as one of the best-run financial entities in the country.
Pedro Mariani, President of Banco BBM, said, “As a result of this project and the profile of Banco BBM’s lending activities, IFC is playing a catalytic role in making additional and longer-tenor credit available to midsize corporate borrowers, a client segment that we have targeted for further expansion.”
About Banco BBM S.A.
As a result of its long history and conservative business culture, Banco BBM’s operations are characterized by robust credit structuring skills, as well as state-of-the-art risk management systems. The bank, which is financially strong and well capitalized, ranked 12th in Brazil’s banking sector in terms of total assets at the end of 2005. Its assets have tripled over the last three years, reaching the equivalent of $5.4 billion at the end of March 2006. Much of this increase was generated by a rapidly growing corporate loan portfolio. The bank’s main shareholder is the Mariani Group, which holds 67.3 percent of its equity.
About IFC
IFC in Brazil
During fiscal year 2005, Brazil received the largest amount of IFC financing, in dollar value, among Latin American countries. IFC invested $591million, including $190 million in syndications, in sectors ranging from agribusiness and transportation to manufacturing and the financial sector. IFC’s total portfolio in Brazil was $913 million at June 2005.
IFC's strategy for Brazil focuses on enhancing clients' prospects for competitiveness and growth, improving the country's social equity through voluntary actions by the private sector, and continuing to promote sustainability. Since 1956, when Brazil joined IFC, the Corporation has provided $7.45 billion, including syndications, for 162 companies in the country.
About IFC
The International Finance Corporation is the private sector arm of the World Bank Group and is headquartered in Washington, D.C. IFC coordinates its activities with the other institutions of the World Bank Group but is legally and financially independent. Its 178 member countries provide its share capital and collectively determine its policies.
The mission of IFC
(
www.ifc.org
)
is to promote sustainable private sector investment in developing and transition 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 FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications.
