Washington, D.C.,  June 9, 2003—The International Finance Corporation , the private sector development arm of the World Bank Group, announced today an agreement to provide a US$20 million  loan Facility  to the Dominican Republic’s Banco BHD, S.A. the third largest bank in the country in terms of assets. This is IFC’s first investment in the Dominican Republic’s financial sector.

The Facility’s purpose is to provideUS$10 million to enhance BHD’s capital structure, and an additional US$10 million to help the bank expand its long-term lending to middle market companies including Dominican exporters.  The Facility would set a landmark in the Dominican financial system by providing the first subordinated loan intended to count as Tier II capital for a bank, as allowed by the new “Ley Monetaria y Financiera” (Financial and Monetary Law) approved by the Government of the Dominican Republic in November 2002.

Bernard Pasquier,  IFC's Director for Latin America and the Caribbean, said: “This loan is a signal of IFC's commitment to the Dominican Republic, in particular the financial sector, which is key for continued economic development.  We are particularly pleased that our first investment in the country’s banking sector is with Banco BHD.”

Karl Voltaire, Director of IFC’s Global Financial Markets Department, said: “the proposed project will not only provide long-term funds to BHD and its customers, it will also provide a demonstration effect for other financial institutions to strengthen their capital base in accordance with the recently enacted law”.

This operation fits well with IFC’s strategy for the Dominican Republic to support the financial sector and to broaden private sector participation in the local economy. By supporting BHD’s on lending operations to middle-market enterprises, IFC would be supporting an important job-creating sector.  IFC's engagement in the Dominican Republic's financial sector is intended to promote international best practices, particularly in the areas of corporate governance and risk management.

Luis Molina Achecar, President of BHD Bank, said: "This investment reaffirms the leadership and innovation capabilities of Banco BHD within the Dominican Republic's banking system, given that we are the first institution to issue Tier 2 capital in the country, a common practice worldwide.  We are proud to be the first recipient of IFC financing in the country's banking system, which represents an important recognition not only for us but for the system overall."

BHD is the third largest Dominican commercial bank, with US$1 billion equivalent in assets and US$105 million equivalent in equity as of December 31, 2002.  Originally established in 1972 as a mortgage bank, Banco BHD and its affiliated commercial and development banks merged in 1992 to form Banco BHD, S.A., the first universal bank in the country.

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 US$34 billion of its own funds and arranged US$21 billion in syndications for 2,825 companies in 140 developing countries. IFC's committed portfolio at the end of FY02 was US$15.1 billion, with an additional US$6.5 billion held for participants in loan syndications.  As of April 30, 2003, IFC had 6 projects held and disbursed in the Dominican Republic, totaling US$95 million for its own account.