IFC Commits Sustainability Credit Line to Brazil’s Banco Real
IFC and Banco ABN AMRO Real announced today a sustainability credit line for Banco Real to fund clients’ projects that have a compelling impact on environmental and social sustainability. The eight-year, $200 million-equivalent deal was announced at a ceremony in Sao Paulo, attended by Lars Thunell, IFC’s CEO and Executive Vice President, on his first official visit to Brazil, and Fabio Barbosa, CEO of Banco ABN Amro Real.
This is the third and largest sustainability credit line undertaken by the two institutions, and it follows up on sustainability-targeted funding of $125 million-equivalent that has been disbursed by IFC to Banco Real over the last two years. The full amount will be made available to Banco Real, and on-lent to its clients, in local currency. The partnership capitalizes on IFC’s innovative local currency-indexed funding capabilities for its clients in Brazil, as well as Banco Real’s well-developed credit business origination network.
“For both IFC and Banco Real, this is an important milestone, not only because of the size of the facility, but also because it demonstrates how both institutions are continuing to set high benchmarks for sustainability-related lending initiatives,” said Lars Thunell IFC’s Executive Vice President and CEO.
Thunell added that IFC’s partnership with Banco Real continues to heighten awareness in Brazil’s financial and commercial sectors of the great potential for sustainability-related banking business.
Fábio Barbosa, Banco ABN AMRO Real’s CEO, complemented: “The local currency-indexed funding provided by IFC in these sustainability credit lines helps us provide long-tenor local currency funding to clients with worthwhile projects. Such funding is often not available in the domestic market to these types of borrowers, especially small and medium enterprises. In the absence of such funding from IFC, projects that have a strong sustainability-related impact—that lead to environment-related as well as corporate governance improvements at Brazilian companies—might not be implemented.”
Sustainability-related projects already financed by Banco Real with prior funding from IFC have involved, among other things, energy efficiency, renewable energy, waste reduction and recycling, and water/effluent treatment, as well as environmentally friendly production initiatives. Under the credit lines, Banco Real can also on-lend IFC funds to family-owned companies that already comply with good corporate governance practices, and who commit to further improvements within a predetermined timeframe. The basic standards as well as required improvements are implemented according to an IFC-designed Corporate Governance Improvement Program framework.
IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing capital in the international financial markets, and providing advisory services to businesses and governments. IFC’s vision is that poor people have the opportunity to escape poverty and improve their lives. In FY06, IFC committed $8.3 billion, including syndications, to 284 investments in 66 developing countries. For more information, please visit www.ifc.org.
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