Washington DC, December 17, 2001—The
Board of Directors of the World Bank approved separate credit lines totaling
US$250 million for two of the largest private banks in Brazil, Banco Itau
and Unibanco, sending a signal of confidence in the Brazilian banking system.
The International Finance Corporation (IFC), the private sector arm of
the World Bank Group, will lend up to $150 million for its own account
to Unibanco, the fourth largest private sector bank in Brazil in terms
of assets, and $100 million to Banco Itau, Brazil’s second largest private
sector bank in terms of assets. The credit lines will be used by
these banks to finance infrastructure, energy, industrial expansion and
environment related projects.
These loans highlight IFC’s commitment to respond rapidly to recent changes
in global and domestic conditions, particularly after the events of September
11, in this case by making long-term finance available to the Brazilian
private sector. The loans also shed a positive light on the growing
project finance activities of two leading Brazilian banks.
Bernard Pasquier, IFC Director for Latin America and the Caribbean noted:
“These investments show that we have confidence in the resilience
of the Brazilian banking system. They confirm that IFC can work effectively
and quickly with the Brazilian private sector to help address various economic
bottlenecks that have recently arisen, such as debilitating power shortages
induced by Brazil’s current energy crisis.” Additionally, Mr. Pasquier
pointed out that the loans are part of IFC’s strategy to invest
in Brazil’s financial sector and physical infrastructure in order to improve
prospects for the country’s sustained growth, an essential precondition
for poverty reduction.
In addition to the credit lines, IFC may arrange a syndicated loan of up
to $150 million for Unibanco, and a syndicated loan of up to $100 million
for Banco Itau, for similar on-lending purposes. These loans would
bring the combined volume of the two operations up to $500 million.
In IFC’s view, Brazil is well equipped to withstand external shocks. Over
the last few years, the Brazilian government has demonstrated an enhanced
capacity to manage risks, pursue structural reforms and stay the course
on fiscal adjustment. These achievements have been complemented by
restructuring of the banking system as well as improved bank supervision
and regulation. As a result, the investment climate in the country
has been improving consistently.
IFC’s mission (www.ifc.org)
is to promote sustainable private sector investment in developing 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, and provides technical assistance
and advice to governments and businesses. Since its founding in 1956,
IFC has committed more than $31 billion of its own funds and arranged $20
billion in syndications for 2,636 companies in 140 developing countries.
IFC’s committed portfolio at the end of FY01 was $14.3 billion.