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New Delhi, October 12, 2006—
International Finance Corporation, the private sector arm of the World Bank Group, will invest $100 million in Upper tier II subordinated bonds with a final maturity of 15 years to be issued by HDFC Bank Limited. The investment will help HDFC Bank augment its capital base primarily to support its growing asset business and will also increase the bank’s long term resources.
Lars Thunell, Executive Vice President of IFC who is currently visiting India said that “IFC’s investment in HDFC Bank reflects our larger goal of developing and strengthening the financial sector in emerging markets.”
“IFC’s quick response to RBI’s Upper Tier II guidelines helps strengthen the long term growth strategy of HDFC Bank. It will help further improve the Bank’s financial fundamentals by strengthening its capital adequacy and diversifying its funding sources. It will help the bank set a new benchmark for raising Upper Tier II Capital in the Indian banking industry,” explained Aditya Puri, Managing Director, HDFC Bank.
Iyad Malas, Director, South Asia, elaborated, “IFC has a long and fruitful relationship with Housing Development Finance Corporation (HDFC), the Bank’s promoter. IFC had helped institute HDFC in 1977. We are pleased to continue to work with HDFC and initiate a new relationship with HDFC Bank with this investment. The investment will strengthen the efficiency and reach of the banking sector in India by supporting a private sector bank.”
The bonds will qualify as Upper Tier II Capital per RBI guidelines. To date, only a few private sector banks have successfully issued UT2 Capital due to the complexity and long term nature of these products. HDFC Bank is a domestic AAA rated institution promoted by Housing Development Finance Corporation, a housing finance institution that IFC helped found in 1977. HDFC Bank is listed on the Mumbai and National Stock Exchanges, and the New York Stock Exchange.
About IFC
The International Finance Corporation, the private sector arm of the World Bank Group, is the largest multilateral provider of financing for private enterprise in developing countries. IFC finances private sector investments, mobilizes capital in international financial markets, facilitates trade, helps clients improve social and environmental sustainability, and provides technical assistance and advice to businesses and governments. From its founding in 1956 through FY06, IFC has committed more than $56 billion of its own funds for private sector investments in the developing world and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. With the support of funding from donors, it has also provided more than $1 billion in technical assistance and advisory services. For more information, visit
www.ifc.org
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