MICROCAPITAL BRIEF: Inter-American Development Bank (IDB) Provides $17.5m Loan Facility to Dominican Commercial Bank ‘Banco BHD’ to Lend to Small and Medium Enterprises (SMEs)

The Inter-American Development Bank (IDB), which provides multilateral financing in Latin America and the Caribbean, has extended a USD 17.5 million loan to Banco BHD, a commercial bank based in the Dominican Republic, in order to “strengthen its capital position and expand its long-term lending to the corporate sector, including small and medium-sized enterprises (SMEs)” [1,2,3]. The facility is made up of a USD 5 million loan with a five-year tenor and a USD 12.5 million loan with an eight-year tenor [1]. The USD 12.5 million loan will be extended in conjunction with an unspecified third party [1].

By Christopher Maggio, Research Assistant

About:
Inter-American Development Bank (IDB)

Description:
The Inter-American Development Bank (IDB) was established in 1959 and provides multilateral financing in Latin America and the Caribbean. The bank works with governments, companies and non-governmental organizations (NGOs) to provide both loans and grants to support small and medium enterprises (SMEs), health, and education, among other sectors. It also provides technical assistance and research in these areas. Its Board of Executives are elected by 48 member countries, 26 of which are from Latin America and the Caribbean.

The IDB does not report to the MIX Market, the microfinance information clearinghouse.

Organization’s Website:
http://www.iadb.org/index.cfm?lang=en

Just the Facts:
-Country of Incorporation: United States
-Year Founded: 1959
-Legal Status: Multilateral Development Bank
-Total Assets: USD 6.3 billion (as of 31/Dec/08)
-Ordinary Capital: USD 101 billion (as of 31/Dec/08)
-Area of Operation: Latin America and the Caribbean
-Participant(s)/Backer(s)/Investor(s): 48 member countries, 26 from Latin America and the Caribbean
-President: Louis Alberto Moreno

Contact Information:
By Mail:
1300 New York Avenue, N.W.
Washington, D.C. 20577
United States of America
By Telephone:
+1 202 623-1000
By fax:
+1 202 623-3096

Additional Resources
IDB Basic Information: http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=2095587

MICROCAPITAL.ORG STORY: Inter-American Development Bank (IDB) Approves USD 7 Million Loan for Salvadorian Housing Fund Fondo Nacional de Vivienda Popular’s (FONAVIPO): https://www.microcapital.org/microcapitalorg-story-inter-american-development-bank-idb-approves-usd-7-million-loan-for-salvadorian-housing-fund-fondo-nacional-de-vivienda-popular%E2%80%99s-fonavipo/

Bibliography:
[1] IDB press release entitled ‘IDB to provide $17.5 million to Banco BHD of Dominican Republic’: http://www.iadb.org/news/detail.cfm?language=English&id=6098
[2] Banco BHD (in Spanish): http://www.bhd.com.do/app/do/frontpage.aspx
[3] Banco BHD company profile on Business News Americas: http://www.bnamericas.com/company-profile/en/Banco_BHD,_S,A,-Banco_BHD

Source Press Release:
Dec 10, 2009
IDB to provide $17.5 million to Banco BHD of Dominican Republic

The IDB will provide up to $17.5 million in loans to Banco BHD, the third largest bank in Dominican Republic, to strengthen its capital position and expand its long-term lending to the corporate sector, including small and medium-sized enterprises.

The facility, approved Dec. 7 by the board of executive directors of the IDB, consists of a senior five-year unsecured loan of up to $5 million and an eight-year subordinated loan for up to $12.5 million from IDB’s ordinary capital. The IDB loan may also be complemented by additional financing from commercial banks.

The transaction will allow the IDB to provide long-term financing to the corporate and small and medium-enterprise sectors, a key element to help the Dominican Republic achieve a sustainable rate of economic growth. It is also envisioned that a portion of the senior loan may be used for a green initiative to convert BHD’s electrical back-up system to a clean energy source, with a technical assistance from IDB’s Sustainable Energy and Climate Change Initiative (SECCI).

The subordinated loan, to be made in partnership with another bilateral organization, will be structured in order to meet the criteria for treatment as Tier II capital by the country’s banking regulator.

“This facility fulfills many of our key priorities in working with Banco BHD, contributing towards a more robust capitalization of the institution through the subordinated loan, while at the same time, pursuing more targeted objectives of development and sustainable practices at the bank with the senior loan,” said Financial Markets Division Chief Daniela Carrera Marquis of the IDB’s Structured and Corporate Finance Department.

“We are very pleased with this approval, which demonstrates the IDB’s commitment with the future of the Dominican Republic and the confidence on its financial system” said Luis Molina Achecar, President of Banco BHD.

BHD is the third largest bank in Dominican Republic with a 14.7% market share of assets. Its majority shareholder is Grupo BHD, a Dominican holding company with interests in the financial services, through Centro Financiero BHD (CFBHD). Banco Sabadell of Spain, Banco Popular of Puerto Rico and the IFC are investors in CFBHD. BHD also takes part as an issuing bank in the IDB’s Trade Finance Facilitation Program

http://www.iadb.org/news/detail.cfm?language=English&id=6098

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