Source: Inter-American Development Bank (IDB)
Original press release here.
USD 70 million to boost lending to microenterprises and improve access to financial services for low-income clients
The Inter-American Development Bank (IDB) Group will provide up to USD 70 million in loans to Banco G&T Continental (G&TC) of Guatemala to support the expansion of credit for microenterprises and small businesses.
G&TC, Guatemala’s second largest commercial bank in terms of assets, started a “downscaling” process to serve microentrepreneurs in 2006 with assistance from the IDB’s Multilateral Investment Fund, a leader in promoting microfinance in Latin America and the Caribbean.
Guatemala has at least 750,000 microenterprises and small and mid-size businesses, which generate about half the jobs and around 40 percent of its gross domestic product. Despite their economic importance, most of these enterprises have little or no access to formal credit.
Under the new project, the IDB will provide G&TC up to USD 45 million. Of that amount, USD 35 million will be provided by the IDB’s Structured and Corporate Finance Department and USD 10 million by the Opportunities for the Majority initiative.
In addition, the IDB Group’s Inter-American Investment Corporation, which specializes in financing for small and mid-size businesses, may provide G&TC a loan of up to USD 25 million.
“This transaction will foster competition in Guatemala’s microfinance sector, contributing to its efficiency and promoting the democratization of credit,” said Financial Markets Division Chief Daniela Carrera-Marquis, of the IDB’s Structured and Corporate Finance Department.
G&TC plans to expand its own lending portfolio for microenterprises and small and mid-size businesses. It will also provide access to other financial services such as ATMs, savings accounts, remittances and microinsurance for low-income clients of other Guatemalan microfinance institutions.
The loans will help G&TC diversify its funding sources and its access to long-term financing at a time of turmoil in international financial markets.
G&TC is active in the corporate, retail and micro banking segments. In August 2008 its assets stood at USD 3.2 billion, its lending portfolio at USD 1.7 billion and its deposits at USD 2.2 billion. The bank has a network of 266 branches, 600 subagents and 1,650 ATMs throughout Guatemala.
The IDB is the leading source of long-term financing for economic and social development in Latin America and the Caribbean. Its Structured and Corporate Finance Department is responsible for its non-sovereign guaranteed operations, which include loans and credit guarantees for private sector businesses and state-owned companies.
The Opportunities for the Majority initiative supports business models designed to provide affordable, better quality goods and services to low- and moderate income people, who constitute a majority of Latin America and the Caribbean’s population.
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