Bogotá, March 17, 2006—The International
Finance Corporation, the private sector arm of the World Bank Group, announced
today an agreement to invest $60 million in Banco Davivienda, one of the
leading financial institutions in Colombia and a longstanding IFC client.
This is IFC’s first local currency subordinated financing in Colombia.
The IFC investment will consist of an equity investment of $25 million
through the subscription of new common shares of Davivienda, and a stand-by
subordinated bond financing of $35 million equivalent that would count
as Tier-2 capital for regulatory solvency requirements.
The $60 million financing package will strengthen Davivienda’s capital
base and support the expansion and consolidation of its operations in Colombia.
IFC previously provided a partial credit guarantee of up to UVR (unidad
de valor real, a notional currency that reflects the inflation adjusted
Colombian Peso) 300 million to facilitate a domestic subordinated bond
issue of UVR 1 billion by Davivienda.
At the onset of Colombia’s financial and mortgage sector crisis in the
late 1990s, Davivienda played a leading role in the transformation of the
Colombian mortgage sector, as the former savings and mortgage lending institutions
(also known as CAVs) shifted their focus from financing mortgages to origination
and securitization, at the same time transforming themselves into full-service
Atul Mehta, IFC’s Director for Latin America and the Caribbean, said,
“Since Davivienda set up operations in 1973, IFC has supported its successful
transformation from a savings and loan institution specializing in mortgage
lending to one of the leading full-service commercial banks in Colombia.
We are proud to become a shareholder of Davivienda.”
Efrain Forero, Davivienda’s chairman, said, “IFC’s investment is a vote
of confidence in Davivienda and in the future of the Colombian financial
markets. IFC fully understands and appreciates our vision for creating
the leading integrated financial services group in Colombia and has demonstrated
its support with a timely decision to become an equity partner.”
Jyrki Koskelo, IFC’s Global Financial Markets director, said, “A vibrant
and healthy private sector is a key element of economic growth and sustainable
job-creation. Strengthening the financial sector in Colombia is a key IFC
priority. Our collaboration with Davivienda shows a clear commitment to
pursue this objective and will establish a foundation for other financial
markets development work in the region.”
Davivienda, including Bansuperior, is the fourth largest financial institution
in Colombia, with approximately $3.7 billion of assets and nearly $400
million of equity as of December 2005. Davivienda serves more than
2 million customers through a nationwide network of 277 branches and 5,370
employees, operating in 48 towns and cities. Davivienda is majority
owned (68.5percent) by Grupo Bolívar, the fifth largest economic conglomerate
IFC in Colombia
IFC’s total portfolio in Colombia was $280 million as of June 2005.Since
Colombia joined IFC in 1956, the Corporation has provided $1.4 billion,
including syndications, for 58 companies.
The financial sector continues to be one of IFC’s priorities in Colombia,
with special emphasis on housing finance and microfinance, as well as strengthening
local capital markets and improving corporate governance. IFC’s strategy
in the country also involves increasing support to strategic sectors
for economic growth in the context of free trade agreements. This strategy
includes financing infrastructure projects such as port expansion, road
and airport concessions, and support to companies in the logistic services
sector. In addition, IFC seeks to finance oil and gas companies expanding
in the region.
The International Finance Corporation is the private sector arm of the
World Bank Group and is headquartered in Washington, D.C. IFC coordinates
its activities with the institutions of the World Bank Group but is legally
and financially independent. Its 178 member countries provide its share
capital and collectively determine its policies.
The mission of IFC is to promote sustainable private sector investment
in developing and transition countries, helping to reduce poverty and improve
people’s lives. IFC finances private sector investments, helps clients
improve social and environmental sustainability, and provides technical
assistance and advice to governments and businesses. From its founding
in 1956 through FY05, IFC has committed more than $49 billion of its funds
and arranged $24 billion in syndications for 3,319 companies in 140 developing
countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion
for its own account and $5.3 billion held for participants in loan syndications.
For more information, visit www.ifc.org.