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.