Washington, D.C., September 16, 2010 —
IFC, a member of the World Bank Group, issued a 50 million Brazilian real guarantee for investors in a fund that securitizes loans originated by Banco Industrial Comercial S.A. to small and midsize businesses in Brazil. The transaction is IFC’s first in a Brazilian securitized fund, or FIDC (Fundos do Investimento em Direitos Creditorios), that targets loans to small and midsize enterprises. These firms provide more than two-thirds of the 35 million jobs in Brazil’s formal economy.
The transaction will increase lending to small and medium businesses, primarily outside the large urban centers, by providing long-term, local currency funding. BicBanco, in turn, can channel the funding to local small and medium firms. BicBanco, an IFC client since 2006, is a leader in providing credit to small and midsize businesses.
Securitizing BicBanco’s loans to small and medium enterprises will allow it to diversify its funding sources and tap into long- term funding from the domestic securitization market. This is an innovative way to complement efforts undertaken by the Brazilian government and many mid-sized banks over the last year to mitigate effects of the global financial crisis and stabilize the funding base of financial intermediaries.
“This transaction will help BicBanco access a new type of institutional investor to support the loan portfolio expansion for our Brazilian small and medium enterprises,” said Milto Bardini, BicBanco’s Executive Vice President. “We confirm once again that IFC is a long-term partner to BicBanco. Together, we were able to provide an instrument to the local capital market that is rarely offered and meets institutional investors’ needs.”
This fund issued 192.5 million Brazilian real of senior quotas and 57.5 million Brazilian real in subordinated quotas for a total of 250 million Brazilian real. The senior quotas were sold to qualified local investors, who have the right to sell up to 25 percent, or as much as 50 million Brazilian real, of their senior quotas to IFC under certain circumstances. BicBanco subscribed to the subordinated quotas. FIDCs are the most commonly used funds that issue asset-backed securities in Brazil.
“The successful placement of the BicBanco FIDC demonstrates IFC’s capacity to mobilize local market resources for financial institutions that play a key role in economic development and job creation in Brazil,” said Paulo de Bolle, IFC Acting Country Manager in Brazil. “This capacity is particularly important in allowing mid-sized banks to diversify their funding sources."
IFC’s strategy in Brazil focuses on promoting access to finance and developing capital markets to reach low-income individuals, microenterprises, and small businesses. As of June 2010, IFC’s committed portfolio in Brazil was $2.4 billion.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in developing countries. We create opportunity for people to escape poverty and improve their lives. We do so by providing financing to help businesses employ more people and supply essential services, by mobilizing capital from others, and by delivering advisory services to ensure sustainable development. In a time of global economic uncertainty, our new investments climbed to a record $18 billion in fiscal 2010. For more information, visit
www.ifc.org
.
About BicBanco
One of Brazil’s oldest private banks, BicBanco is a leading provider of funding to small and medium enterprises in Brazil. It is the fifth-largest national private bank in terms of loans extended to midsized companies. The bank’s main product lines are working capital, secured loans, trade finance, and public employee loans. BicBanco is rated brA (stable) by the S&P on Brazil’s domestic rating scale. For more information, visit
www.bicbanco.com.br
.
