The International Finance Corporation (IFC), a member of the World Bank Group dedicated to private sector development, has agreed to invest 77 million Mexican pesos (USD 7.1 million equivalent) in Mexican microfinance bank Banco Amigo. Formally known as Banco Comercial del Noreste, S.A., the bank is headquartered in Monterrey, Mexico, and opened to the public in May 2007. The bank received its banking license in November 2006. Prior to licensing, it operated as a non-bank financial institution since 2005. The common share equity investment represents up to an 18% stake in the bank.In addition to the investment, Banco Amigo will also receive a loan of up to USD 10.3 million combined with an IFC advisory services package aimed at bolstering the bank’s operations. Together, the two organizations will refine the bank’s underwriting policies, train loan officers, and define new products and services. The bank will use IFC support to expand its loan portfolio as it builds its deposit accounts and develops intermediate savings. In an article on CNNExpansion.com, the bank’s president, Gerardo José de la Garza Santos, projects growth to approximately 250,000 clients by the end of 2007. Demographics on the bank’s current client total are not available. It is unclear how the bank plans to meet its ambitious projection.

Banco Amigo is an affiliate of Landus Grupo Inmobiliario, a private Real Estate development corporation founded in 2003 by Sergio G. González Lozano. The group operates commercial, industrial, and residential real estate divisions as well as Optima Hotels of Mexico, a hotel development and administration arm that manages five properties in Monterrey, Mexico.

Landus Grupo Inmobiliario formed Banco Amigo after divesting its interest in Metrofinanciera, the mortgage company its founders created in 1996. The sale of equity in Metrofinanciera, along with investor capital, was utilized to fund the bank. Metrofinanciera’s primary business activity is extending mortgage loans to low-income individuals. Metrofinanciera’s June 2007 financial statement reveals total assets equivalent to USD 1.7 billion, a debt/equity ratio of 14.2%, and an 18.7% return on equity. Financial data on Landus Grupo Inmobiliario and its real estate subsidiaries is not available.

Banco Amigo’s June 2007 financial statement reveals total assets equivalent to USD 52.8 million, a debt/equity Ratio of 73%, and a -2.9% return on equity.

-Steven Craig

Additional Sources:

Banco Amigo: http://www.bancoamigo.com.mx/

IFC: http://www.ifc.org/ifcext/lac.nsf/Content/SelectedProject?OpenDocument&UNID=2921182EB2994483852572C1000260EA

IFC: http://www.ifc.org/ifcext/spiwebsite1.nsf/0/2921182eb2994483852572c1000260ea?OpenDocument

IFC: http://www.ifc.org/ifcext/media.nsf/content/SelectedPressRelease?OpenDocument&UNID=9CAED795A5A7B81885257322006CA4D1