Washington DC, April 3, 2003—
The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has concluded syndication of an oversubscribed $180 million Trade Finance Facility (TFF) for Banco Bradesco S.A., Brazil’s largest private sector bank. IFC, as arranger of the facility, was supported in this transaction by the Inter-American Development Bank (IADB).
The Trade Finance Facility – which was originally targeted to raise $150 million – will be used to provide pre- and post-shipment export financing to Brazilian companies, and is composed of a $10 million A Loan from IFC, a $50 million A Loan from IADB, as well as $120 million of B Loan funding provided by 16 international commercial banks.
The Bradesco transaction continues an initiative started by IFC in August 2002 to rapidly provide international funding to leading Brazilian banks that are major players in the country’s trade finance sector. This effort was a response to cutbacks of credit lines from international banks to Brazilian borrowers in the second half of last year, and complemented several Government programs undertaken to provide temporary, short-tenor liquidity to the country’s trade finance markets.
Bernard Pasquier, Director of Latin America and Caribbean at IFC, noted: “Global risk aversion forced many international banks to cut credit exposure last year to Brazilian financial institutions, resulting in an unprecedented decrease in the amounts outstanding and tenors of trade finance offered to Brazilian borrowers. Moreover, recent shortages in trade finance have been particularly arduous for small- and medium-sized exporters (SMEs).
Mr. Pasquier added: “The current Bradesco Trade Finance Facility provides resources to Brazil’s largest private sector bank, which has one of the most developed business franchise and distribution network among the country’s SMEs. That will make it more likely that enhanced trade finance liquidity is made available to this category of exporters – who account for an increasing proportion of the country’s growing volume of exports.”
IFC Trade Finance Facilities have been arranged for several domestic banks that are leading intermediaries in Brazil’s trade finance markets, and have raised an aggregate amount of $715 million of international funding since September 2002.
The IFC Trade Facilities have made trade finance resources rapidly available to a broad cross-section of Brazil’s exporter community, in terms of the number of exporters that have benefited from the program, the absolute number of on-lendings to such exporters, as well as tenors provided to borrowers – which have been considerably longer than maturities offered at the time by either Government programs or commercial lenders under traditional bilateral facilities. In these ways, the TFF initiative has helped to reinforce the ongoing improvement in Brazil's external accounts.
Suellen Lazarus, Director of IFC’s Syndications Department, added: "We are very pleased because this latest successful transaction for Bradesco, a dominant player in the country’s trade finance business, indicated that the market for short-term trade credit is gradually improving. We received indications from the banks that bilateral lines for trade finance activity in Brazil that were withdrawn last year are beginning to be re-established. If this continues, it will allow IFC to refocus its efforts on the more traditional pursuits like medium- to long-term corporate and project lending, as well as structured finance transactions which promote domestic capital market development and help Brazilian issuers obtain reasonably priced, long-tenor, international funding.”
Bradesco, founded in 1943, provides a comprehensive range of retail and wholesale financial products as well as services directly or through subsidiaries to 13 million customers. The bank works through a network of 2,954 branches (the second-largest in the country after Banco do Brasil’s and accounting for approximately 17% of the total bank branch network in Brazil), as well as 1,775 outlets. Although Bradesco’s commercial banking operations encompass all market segments, they are characterized by a strong retail focus.
Bradesco is the largest private bank in Brazil, with total assets of BRL142.8 billion (US$40.4 billion, at BRL3.53 per US$1 in December 2002), as well as market shares of approximately 24% of deposits and 20% of loan transactions among private institutions in the competitive Brazilian banking segment. Bradesco is also one of the country’s largest private sector asset and fund managers with a market share of approximately 14%. Furthermore, it controls approximately 52% of the country’s private pensions market in terms of assets, 15% of the credit cards business, as well as 24% of the insurance premium market. (All figures and data as of December 31, 2002.)
The mission of IFC (
) is to promote sustainable private sector investment in transition economies, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the emerging markets, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. Since 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.