Washington, D.C.,Tegucigalpa, January 27,
2008—IFC, a member of the World Bank Group, today announced the successful
completion of a financing package that helped create Banco Popular Covelo
(Bancovelo), which will be the leading microfinance institution in Honduras.
IFC will invest up to $2 million in new capital in Bancovelo and
provide over $440,000 in advisory services to help the bank streamline
and expand its lending operations to low-income entrepreneurs.
Popular, a microfinance entity for savings
and loans sponsored by Grupo Financiero Covelo, merged in 2007 with two
sister entities to form the new microfinance institution Bancovelo. IFC’s
agreement to provide equity for 11.8 percent of Bancovelo’s total new
capital enabled it to receive its banking license in December 2007. Manuel
Zelaya Rosales, President of Honduras, will host the official launch of
the new bank today in Tegucigalpa.
Other new shareholders include Accion International,
the Belgium development entity BIO, the Netherlands development institution
FMO, and CABEI, with equal shares. IFC led the structuring of the
financing package for Bancovelo and will provide the largest contribution
of advisory services among shareholders.
Victor Rheinboldt, President of the Board
of Directors of Bancovelo, said, “The creation of Bancovelo is a significant
step towards expanding access to finance to sectors in Honduras which have
been underserved, in particular the small and micro enterprise. We are
very pleased with the support that IFC has provided to ensure Bancovelo
becomes a strong and sustainable player in the microfinance sector in Honduras.
We look forward to the continued support of the IFC.”
IFC will provide advisory services to Bancovelo over a two-year period.
The objective is to foster the development of the microfinance sector in
Honduras by working with Bancovelo to adopt international best practices
and provide access to finance for underserved markets in a sustainable
way. It will focus on strengthening several areas, including development
of new products, enhancing operational efficiency and helping develop internal
capacity through training of loan officers. IFC is increasingly integrating
advisory services into its financial sector projects in Latin America,
thus helping introduce best practices and increase the development impact
of its projects.
Marcos Brujis, IFC’s Senior Manager for
Mexico and Central America, said, “IFC’s support to Bancovelo shows our
commitment to helping develop a strong microfinance sector in Honduras,
an essential engine for growth and for creating opportunities. In a country
where micro, small, and medium enterprises contribute about 25 percent
of GDP, only about 1 percent of loans to this sector are financed by commercial
banks. IFC is keen to continue supporting Bancovelo and help fill
this important gap in the country’s banking sector.”
Bancovelo’s new status as a commercial bank
will allow it to expand more rapidly and provide a broader range of financial
products. The bank has a network of 27 branches in rural and urban
Honduras. At year-end 2007, it had nearly 24,000 borrowers, of whom over
69 percent were women. The average loan size is $2,175 equivalent
in local currency, and the beneficiaries are low-income people. Bancovelo
expects to triple the number of beneficiaries it serves in the next five
Honduras is a priority country for IFC, whose
strategy there is to promote access to finance by supporting the financial
sector and to implement programs for simplifying administrative procedures
and business regulations at the municipal level. This will help improve
the country’s business environment for small and medium enterprises.
IFC’s total committed portfolio in Central
America as of June 2007 was nearly $660 million. IFC is expanding
its operations in this region, focusing on supporting regional integration
through private sector participation in infrastructure projects. IFC’s
strategy also looks to strengthen the financial sector by supporting access
to finance for small and medium enterprises, housing finance, and firms
involved in agriculture and services to improve their competitiveness.
IFC also aims to help companies expand within Central America and beyond.
IFC, a member of the World Bank Group, fosters
sustainable economic growth in developing countries by financing private
sector investment, mobilizing private capital in local and international
financial markets, and providing advisory and risk mitigation services
to businesses and governments. IFC’s vision is that poor people have the
opportunity to escape poverty and improve their lives. In FY07, IFC committed
$8.2 billion and mobilized an additional $3.9 billion through syndications
and structured finance for 299 investments in 69 developing countries.
IFC also provided advisory services in 97 countries. For more information,